Company car drivers are being warned of changes to vehicle emissions tests that will hike up tax ratings for plug-in hybrids, closing a loophole.

The new regime is expected to accelerate a downturn in plug-in hybrid demand

In the UK, the tests are applicable to all new models launched since 1 January 2025 and are due to be rolled out across all cars on sale from 31 December 2025, which means cars will need to be retested. The UK government will consult later this year on the proposal to mandate the new regime for all new vehicle registrations from 2026.

The changes will not apply retrospectively so any vehicles already registered won’t be affected.

The biggest change under the Euro 6e-bis regulations is a revision to the emissions testing methodologies and the ‘utility factor’ (UF) metric on the ratio of miles driven using the battery to the total miles driven.

Plug-in hybrids will be tested in two operating modes – with a fully charged battery and depleted battery. The emissions are then weighted using an updated utility factor. The outgoing tests simulated 800km (497 miles) of driving but under the new Euro 6e-bis standard, this hikes up to 2,200km (1,367 miles), giving a better idea of how PHEVs perform in real life by cutting the electric range.

The International Council on Clean Transport (ICCT) said: “Over the past several years, it has become evident that the currently used UF curve does not reflect the real usage of PHEVs resulting in unrepresentatively low official CO2 emission values.”

The results could mean popular models see their CO2 emissions double or more. It also means that company car drivers ordering PHEVs this year could see their BiK band affected if the vehicle is re-homologated between the point of order and delivery. The tests will also impact leasing disallowances and capital allowances.

Tests carried by the ICCT on the BMW X1 xDrive25e and using the revised conditions showed the X1’s emissions rose from around 45g/km to 96g/km, pushing it from the 8% BiK bracket into the 24% branding.

Compounding the situation, new ‘Euro 6e-bis-FCM’ regulations are due in 2027, changing the utility factor to 4,260 km (2,647 miles). ICCT tests on the BMW X1 indicate this would increase official emissions to around 122g/km.

The new regimes are expected to accelerate a downturn in plug-in hybrid demand and propel the transition to fully electric vehicles faster. Plug-in hybrids will also be hit by higher company car tax thresholds from 2028.