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HMRC clarifies tax banding for diesel hybrids

HM Revenue and Customs (HMRC) has clarified that diesel-electric hybrids will be classified in band A, rather than type D.

Under previous rules, diesel hybrids would have attracted a 3% levy on the Benefit in Kind (BIK) tax payment, but now models like Volvo’s V60 plug-in hybrid will be classed as a ‘hybrid' for tax purposes and will be exempt from the 3% BIK diesel levvy. This exemption could save at least £200 a year for company car drivers.

Models like the Peugeot 3008 hybrid-4, 508 hybrid-4 and Citroen DS5 hybrid-4 will also benefit from the taxation clarification.

Selwyn Cooper, Volvo UK's national corporate operations manager, said: “We are delighted that HMRC has both cleared up the confusion as well as acknowledging the rightful banding for diesel hybrids is alongside its petrol hybrid siblings."

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