Following yesterday’s Budget, fleet managers may need to overhaul company car lists as new tax policies put plug-in hybrids (PHEVs) and double cabs under scrutiny, according to the Association of Fleet Professionals (AFP).
The changes, AFP said, signal the government’s push for zero-emission electric vehicles (EVs) as the primary option for company fleets.
Paul Hollick, AFP chair, described the Budget as a “tidying-up operation” that removes tax “grey areas” for PHEVs, double cabs, and other car ownership schemes for dealer employees. “The government is making it clear that it wants all company car drivers behind the wheel of a zero-emissions electric car,” Hollick added, noting that nearly any other option now carries steep tax implications.
Under the new tax policies, PHEV drivers will see their benefit-in-kind (BIK) tax rate climb from around 5% today to 18% by 2028-29, disincentivising their use. Double cabs will also be subject to car tax rates from next April, with “grandfather rights” applying to current users until 2029-30. Hollick indicated that drivers using PHEVs in four-year cycles are likely to “head into work… to talk to their employer” about alternatives, while double cabs, he suggested, might “almost disappear from car fleets” as tax rates rise.
Despite the challenges, AFP welcomed the Budget’s longer-term BIK tax tables through the end of the decade. Hollick said this will allow fleets to plan with greater certainty, noting, “While we don’t want to see benefit-in-kind on electric cars rise to 9% by 2029/30… the process appears to be managed responsibly.”
With the government’s emphasis on EVs, extending 100% first-year allowances, and favouring EVs under Vehicle Excise Duty, Hollick urged fleets to keep EVs central in revised choice lists.
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