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Diesel hybrids avoid 3% BIK surcharge

  • Peugeot 3008 HYbrid4 escapes added tax charge
  • New ruling could save you £100s per year
  • Work out the cost of your company car tax here

Written by Parkers Published: 18 November 2011 Updated: 18 November 2011

Company car drivers will not be hit by the added 3% diesel Benefit in Kind tax surcharge if they pick a diesel hybrid.

Current rules in the company car tax system mean that no matter what the emissions are of a diesel car it is subject to an additional 3% taxation. This often means that any potential savings are wiped out.

However, it’s been confirmed that the raft of new diesel hybrid models coming from Citroen and Peugeot will not incur the added cost. This means that the cars will fall in to the 10% BIK tax bracket rather than the 13% bracket for the 2011/12 and 2012/13 tax years.

The diesel/hybrid technology will feature in the Peugeot 3008, Peugeot 508 saloon and SW Hybrid4 models as well as the new Citroen DS5. The new ruling will also apply to the Volvo V60 Plug-in Hybrid set to arrive next year.

This means company car drivers could see significant savings. Opting for a Peugeot 3008 2.0 e-HDI HYbrid4 with the10% taxation will cost £539 per year and £45 per month on the 20% tax rates. If the model were to be based on the current system for diesel models it would cost £700 per year and £58 per month on the same tax rate. That’s a saving of £161 per year.

Phil Robson, Peugeot Fleet Sales Director, said: “The clarification by HMRC that customers of our HYbrid4 cars will not incur the 3% diesel surcharge, and benefit from the 10% threshold for personal BIK taxation, is excellent news. It is the final piece in the HYbrid4 jigsaw and means that both individuals and businesses will benefit from the best possible environmental and fiscal position.”