Plug-in hybrid electric vehicles (PHEVs) are a convenient stepping stone for employees wanting to reduce their emissions but aren’t ready for a fully electric car. PHEVs have both a rechargeable electric battery and a petrol or diesel engine, meaning drivers can choose how and when they fuel their car with ease.
Plus, thanks to the 2025 November budget, now is the prime time to get behind the wheel of a PHEV. For the next two years, PHEVs are a tax savvy option for employees who benefit from a company car or salary sacrifice scheme.
1. PHEVs are a practical step towards electric
With the 2030 petrol and diesel ban on the horizon, PHEVs give drivers the chance to become familiar with charging, while still having the reassurance of a conventional fuel tank. This allows employees to reduce emissions and running costs, while avoiding full reliance on charging infrastructure, which is especially helpful for those who regularly travel long distances or drive beyond their local area.
Although many businesses currently reserve their car schemes for battery electric vehicles (BEVs), PHEVs were the fastest growing powertrain in 2025, with registrations increasing by 34.7%.
Introducing PHEVs into your company car or salary sacrifice offering could broaden access, appeal to a wider range of employees, and strengthen your overall benefits package.
2. Why a two-year agreement benefits employees
Between April 2026 and April 2028, the Government is introducing a temporary tax easement that maintains a financial advantage for drivers who move away from petrol or diesel company cars.
Under this measure, PHEVs will attract lower Benefit‑in‑Kind (BiK) rates, with some models eligible for rates as low as 7%.
If employees are considering ordering a PHEV through a company car or salary sacrifice scheme, a contract of up to two years is likely to be the most financially beneficial option. This ensures they take advantage of the reduced BiK rates before they rise again in April 2028.
3. Guidance for employees already driving PHEVs
Employees who are already in a PHEV and whose agreements end before 2028 will not be directly affected by the upcoming changes. However, awareness of the new rules will help them make informed decisions when they next choose or renew their vehicle.
Your leasing partner should be able to support you in communicating these regulatory updates clearly. At Zenith, our consultants work closely with HR teams to develop strategies that keep benefits competitive, respond to changing market conditions, and align with your organisation’s operational needs and long‑term priorities.
Summary
For employees, choosing a PHEV is a cost‑effective way to adopt more sustainable driving habits. PHEVs provide tax efficiency, flexibility, convenience, and a gradual introduction to fully electric motoring.
For employers, offering PHEVs through your company car or salary sacrifice scheme can enhance your benefits package, support recruitment and retention, and contribute to higher employee satisfaction.
