As a result, the PSA Peugeot-Citroen HYbrid4 models and Volvo V60 Plug-in Hybrid, which are all due to arrive next year, will fall into the same type A tax band as other sub-120g/km vehicles. All three manufacturers have welcomed the news.

"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,’ said Volvo UK's national corporate operations manager, Selwyn Cooper.

Phil Robson, Fleet Sales Director, added: ‘As a company car owner Peugeot’s HYbrid4 means low fuel costs, low emissions, low BIK and for the company lower Employer National Insurance contributions, alongside an allowance for the company to offset 100% of the list price, in the first year, against its taxable profits.’

Andy Wady, Citroën UK’s Fleet Director, said the news was an added advantage for its forthcoming models: ‘This is fantastic news as we gear up for the launch of DS5 early next year.  It’s also great news for many company car drivers already attracted to DS5 and the Hybrid4 powertrain with its impressive fuel economy, low CO2 emissions, free VED, no London Congestion Charge and now a BIK taxation rate at just 10%.’