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Do I Get a Tax Credit for Leasing a Hybrid Car?

Along with other benefits of leasing a hybrid car, including lower running costs, there are also certain tax incentives for leasing a hybrid car.

Various tax incentives exist for hybrid cars. This is because when it comes to emissions-based car tax, hybrid vehicles tend to have a better fuel economy and lower tailpipe CO2 emissions than conventional cars.

Vehicle Excise Duty (Car Tax)

Hybrid cars registered from April 2017 are eligible for the £10 Alternative Fuel Discount, which applies to both the first year and standard rates of car tax.

The first year rate puts a weighting on tailpipe CO2 emissions, which is good news for hybrids, since this is where they perform especially well.

Therefore, car tax is generally lower for hybrid cars than for conventional vehicles. As car tax is included in your leasing payments, this means you see the saving each month.

Company Car Tax

Benefit in kind (BIK) rates apply when a company car is made available for private use. BIK rates are based on the car’s value and its tailpipe CO2 emissions.

The fuel economy of hybrid cars means this is lower, reducing emissions by around 20% to 25%.

This puts many of them on lower tax bands, saving on BIK payable.

  • From April 2020, hybrid cars with CO2 emissions under 50g attract BIK tax rates between 0% and 12%
  • Petrol vehicles typically have CO2 emissions over 100g, attracting a BIK rate of 23%
  • Diesel vehicles that do not have an RDE2 (real driving emissions step 2) discount will get a 4% supplement added to their BIK tax.

Does it Pay to Lease Rather than Own a Hybrid Car?

For both private and company car drivers, leasing a hybrid car has key benefits when it comes overall affordability, as well as tax-related advantages.

Leasing reduces the burden of an initial financial outlay, and removes the risk of depreciation for the driver.

It broadens the choice of vehicles available within a given budget.

And then there are the tax issues to consider.

There are tax incentives, rather than tax credits, which make leasing a hybrid vehicle an attractive option.

As we have seen, these are:

  • Reduced car tax
  • Lower BIK rates for company car tax.

At LetsTalk Leasing, our options for hybrid leasing are increasing week by week.

Isn’t it time you took advantage of what a hybrid vehicle leasing could offer you in affordability and tax savings?

For more details about our hybrid car leasing options, please call us on 0330 056 3331, email or fill in our online contact form and we’ll be in touch as soon as possible.


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