The impact of progressive changes made to CO2-based benefit-in-kind taxation and to corporation tax in the UK since 2019 has given company car drivers a pretty stark choice: either opt out of your employer's fleet scheme and into the car market first hand, or stay in and switch to a plug-in hybrid car.
The legacy of those changes can already be seen in the growing popularity of 'PHEV' executive cars. As those cars attract a greater following, so the number of models competing grows. There are now many more electrified executive cars than we can list in a top ten chart, ranging from sub-£40,000 affordable options to more expensive pseudo-performance models.
For all of them, annual benefit-in-kind tax liability can be roughly worked out in same way: by multiplying the car's 'P11d' showroom price by its 'BIK' tax bracket, and then by your own income tax rate. A plug-in hybrid's benefit-in-kind classification, meanwhile, is defined in part by its CO2 emissions and in part by its electric-only range. So right now, for the 2021-22 tax year, the most tax-efficient cars in this list could qualify for 'BIK' at just seven per cent of their showroom value; and the least efficient, depending on individual specification, could cost as much as 14 per cent (to a typical company car driver, the difference between the two could be worth £100-a-month). Most conventionally powered executive cars, by contrast, would now qualify for BIK company car tax at 30 per cent or more
As many company car drivers will have already discovered to their cost, if you want to continue paying anything like the same benefit-in-kind tax on a company car in 2021 as you have in past, the only way to do it – if you haven’t already – is to move out of a petrol or diesel car and into a PHEV. These are the cars you should be considering for that big move.
Having been in a period of relative stability for eighteen months or so, the plug-in hybrid executive car segment is about to go into another phase of rapid change, with fresh metal waiting in the wings to bring big improvements in real-world electric range to the class. And the first car to have hit the ground ready to lead the change is the latest 'W206'-generation Mercedes C-Class, which launches in the UK in PHEV later this year.
Packing a drive battery twice the size of many of its rivals, the new C300e brings with it a claimed WLTP electric range of some 62 miles. That's enough not only to make the car particularly tax-efficient, but also to make a big difference to the saving the car could deliver for drivers who pay for their own fuel. DC rapid charging will be available as an option, at speeds of up to 55kW.