The October 2024 Budget is likely to have ended the current revival of fleet interest in plug-in hybrid (PHEV) company cars, FleetCheck is predicting.

Peter Golding, managing director at the fleet software specialist, pointed out that anyone now paying a 5% benefit in kind on a new PHEV in the current tax year would see a jump to 18% by year four in 2028/29.

He said: “We’ve seen a trend develop during the last year or so with a wave of new PHEVs arriving that have a much-increased electric-only range. This has made them little more expensive from a personal tax point of view than a full battery electric vehicle (EV).

“Quite a few drivers have seen these cars as a useful stepping stone to going fully electric, sidestepping concerns about range anxiety and the charging infrastructure, and they have made their way onto an increasing number of choice lists.

“It’s pretty clear from the Budget that the government wants to strongly discourage this line of thinking. While there is probably only a couple of percentage points difference in benefit in kind between an EV and PHEV for a driver today, that rises to a difference of 7% and 18% in four years. Not many people are going to want to pay that bill.”

Peter added that the move appeared to bring government policy more closely into line when it came to electrification.

“With the recent clarification that hybrids would be allowed to stay on sale until 2035, there was arguably a slight pull against zero emissions mandate targets. Now, it looks like their thinking is much more consistent, especially the fact there will be a high, flat rate for all PHEVs from 2028/29. If you are getting a company car, the government wants it to be an EV.

“Where the new wave of PHEVs probably remain likely to find sales is in the private sector. Individual consumers are showing quite a high level of resistance to EVs for a variety of reasons and PHEVs provide a solution, as long as people are willing to pay the newly increased first year vehicle excise duty.”