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No company car surcharge for diesel hybrids, says HM Revenue and Customs

Diesel hybrids will be exempt from the usual 3% benefit in kind surcharge placed on diesel engines cars.

Manufacturers had feared the 3% levy on BIK tax payment would be applied to the new powertrains.

But HMRC has now clarified that diesel-electric hybrids have now been incorporated in the type A tax band rather than the previous type D, which attracts the levy. 

This is likely to translate to a saving of at least £200 per year for company car drivers.

The decision has been welcomed by carmakers including Volvo Car UK, whose tax consultants, Hampshire-based BCF Wessex, had analysed HMRC's rules.

Peugeot became the first carmaker to launch a diesel-electric hybrid this year, but Volvo plans to launch its own in 2012.

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