If you chose a plug-in hybrid as your company car to keep the tax bill down, the Budget has just confirmed that bill is set to nearly triple. Chancellor John Healey set company car tax for the 2030/31 tax year on 28 October, adding one percentage point to every band, which takes plug-in hybrids to 20% of their list price on top of the jump to a flat 18% already due in April 2028. On a £40,000 plug-in hybrid with 70 to 129 miles of electric range, a basic-rate taxpayer goes from £560 a year now to £1,600, while an electric car at the same price would cost £800.
Company car tax rates for plug-in hybrids to 2030/31
Company car tax, or benefit-in-kind, is charged on a percentage of the car's list price, and for plug-in hybrids under 50g/km that percentage currently depends on how far the car goes on electric power alone. In 2026/27 it runs from 4% for cars with more than 130 miles of electric range to 15% for those with less than 30, according to GOV.UK, and every band goes up by one point in 2027/28.
From April 2028 the electric range stops counting at all, and every plug-in hybrid under 50g/km pays a flat 18%, rising to 19% in 2029/30 and to 20% in 2030/31 under this week's Budget. Hybrids officially over 50g/km follow the standard CO2 bands instead, which from 2028 are the same or higher, so it's worth checking your car's CO2 figure on its V5C or in your company car paperwork.
The longest-range hybrids are hit hardest, because a car on 4% today will be taxed at five times that rate by 2030/31, while a short-range one already on 15% will barely notice the change.
How much is company car tax on a plug-in hybrid?
Here's what a £40,000 plug-in hybrid with 70 to 129 miles of electric range costs a year, set against an electric company car at the same price.
| Tax year | Plug-in hybrid rate | Hybrid tax at 20% | Hybrid tax at 40% | Electric car rate | Electric tax at 20% | Electric tax at 40% |
|---|---|---|---|---|---|---|
| 2026/27 | 7% | £560 | £1,120 | 4% | £320 | £640 |
| 2027/28 | 8% | £640 | £1,280 | 5% | £400 | £800 |
| 2028/29 | 18% | £1,440 | £2,880 | 7% | £560 | £1,120 |
| 2029/30 | 19% | £1,520 | £3,040 | 9% | £720 | £1,440 |
| 2030/31 | 20% | £1,600 | £3,200 | 10% | £800 | £1,600 |
Regit calculation using GOV.UK company car tax rates, a £40,000 list price and income tax at 20% (basic rate) or 40% (higher rate). Swap in your own car's list price for your figure.
In monthly terms, a basic-rate taxpayer goes from about £47 a month now to £133 in 2030/31, and a higher-rate taxpayer from about £93 to £267. Most of that pain arrives in one go in April 2028, when the hybrid rate more than doubles overnight from 8% to 18%.
Is an electric company car cheaper?
By a long way, though electric cars aren't escaping either, as their rate rises from 4% now to 10% in 2030/31. On our £40,000 example the electric car is still taxed at half the hybrid's rate that year, saving a basic-rate taxpayer £800 and a higher-rate taxpayer £1,600 over the hybrid.
The pay-per-mile tax, or eVED, also starts in April 2028 at 3p a mile for electric cars and 1.5p for plug-in hybrids, so an electric car would pay £150 a year more than a hybrid at 10,000 miles. Who pays it on a company car depends on your employer and your contract, but even if it all landed on you it would claw back only a fraction of the company car tax gap.
The Treasury expects the 2030/31 rise to bring in an extra £310 million that year and £345 million the year after. The leasing industry body BVRLA had asked for the electric rate to be held at 9%, so even the drivers the government wants to encourage are paying a little more.
Should you swap your hybrid company car?
If your current deal ends before April 2028, you'll miss the big jump, so there's no reason to rush out of it. The people who need to think hardest are those choosing a new company or salary-sacrifice car now, because a typical three- or four-year deal signed this winter will run straight through the 2028 change.
For most of them an electric car is the obvious pick, as long as you can charge at home or at work and your longest regular trips fit the range. A plug-in hybrid still makes sense for drivers who tow or regularly cover long distances with nowhere to charge, but you'll be paying for that flexibility at twice the rate of an electric car by 2030/31. For everything else in this week's Budget that affects drivers, see (LINK: What the Autumn Budget could cost you as a driver, https://www.regit.cars/car-news/what-the-autumn-budget-could-cost-you-as-a-driver).
Stay ahead of the next change
The Treasury has a habit of revisiting company car tax at Budget time, so [get the latest from Regit in your inbox](LINK: Regit newsletter sign-up page) and you'll hear about the next change before you sign your next deal.
Our verdict
If your next company car is a plug-in hybrid, you'll be paying for that choice from April 2028, when the rate more than doubles, so unless you tow or can't charge at home or work, go electric. On our sums a £40,000 electric car saves a basic-rate taxpayer £800 a year by 2030/31 and a higher-rate taxpayer £1,600, which is a lot of money to hand the Treasury for a petrol engine you may barely use.