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Mild hybrid diesels escape 4% company car tax surcharge

 Published 7th October 2020
HMRC / Tax 

For fleets and business users running company cars - we have some good news. There is less benefit in kind tax to pay on diesels that feature mild hybrid technology (such as the Kia Sportage pictured).

Often these vehicles are referred to as MHEVs - for mild hybrid electric vehicles. And the reason such vehicles are now exempt is due to a change in status announced by the DVLA and HMRC.

Originally, the DVLA and HMRC explained that because MHEVs were not able to travel on electric power alone, they should be taxed for both VED and BIK as a conventional petrol or diesel engine.

With this decision reversed, it means diesel MHEVs are liable for reduced BIK, while all MHEVs are liable for reduced VED under the alternative fuel discount scheme.

According to data provider cap hpi, there are now 1200 MHEV derivatives that meet the alternative fuel discount requirements.

What sort of hybrid is a MHEV?

A MHEV uses a 48v electrical system to enable features that make the car's running more efficient. This improves fuel economy and lowers CO2 emissions.

The battery powers a starter generator which adds additional assistance to the energy, stores power under braking and allows the car to coast when cruising and restart seamlessly when power is required.

A MHEV differs primarily from a PHEV (Plug-in Electric Vehicle) in that a PHEV can run on the battery only for often 30 miles or more, whereas a MHEV cannot.

For more on electric hybrid acronyms visit the BVRLA's website and read New classifications for electric vehicles .

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