Plans to ease tax impact of new emissions testing on PHEVs

The government is planning to introduce legislation aimed at softening the impact of higher company car tax triggered by stricter emissions testing for plug-in hybrid electric vehicles (PHEVs).

The Treasury has confirmed that the Department for Transport (DfT) will soon consult on a proposal to adopt the Euro 6e-bis emissions standard in Great Britain. If approved, this standard would apply to all new car and van registrations from April 2026.

Currently, Great Britain uses the Euro 6d standard, while Northern Ireland – in line with EU regulations – adopted the Euro 6e-bis standard in January 2025.

In a parliamentary statement, Treasury minister James Murray explained: "The government recognises that while it is right that higher emitting vehicles pay more tax, company cars continue to play an important role supporting our transition towards zero emission vehicles and the decarbonisation of transport. 

"Subject to consultation outcome, the government intends to legislate for an easement that will apply UK-wide between April 2026 and April 2028 to help mitigate the benefit in kind tax impact. In Northern Ireland, the easement will also apply retrospectively to January 2025 in order to ensure consistency across the UK."