Fleet News

ACFO renews call for plug-in hybrid advisory fuel rates following BBC report

Fleet news logo

ACFO has renewed its calls for plug-in hybrid vehicle advisory fuel rates to be introduced after reports that many employees do not charge their PHEVs.

TMC earlier this week warned that company car drivers failing to charge their PHEVs could mean the fleet industry loses Government support for adopting the technology. 

Its data on 1,500 PHEVs, used in a BBC report, showed they had a real-world fuel economy of 39.3mpg – many models have official combined fuel economy of more than 120mpg – while some drivers do not charge their cars at all.

However, ACFO said that introducing an AFR for PHEVs, which it has long campaigned for, will incentivise staff to use the technology correctly.

John Pryor, chairman of ACFO, said: “TMC’s data came as no surprise to ACFO. Plug-in hybrid vehicles are at their most efficient when driven for as many miles as possible on electric power.

“Therefore, particularly with technology advances likely to increase the electric range of such cars, publishing appropriate advisory electricity rates for plug-in hybrid cars will help to encourage drivers to use the car in the optimal environmentally-friendly way.

“Plug-in hybrid models are a major part of vehicle manufacturers’ future electrification programmes and, as a result, an increasing number of such vehicles will find their way onto company car choice lists due to their benefit-in-kind tax efficiency.

“However, without an incentive linked to how such ultra-low emission vehicles are used on the road, it will not prevent drivers using the combustion engine alone in a plug-in hybrid car.

“The fleet industry continues to be awash with stories of company car drivers choosing plug-in hybrid vehicles in pursuit of lower benefit-in-kind tax bills, but not reaping fuel economy savings.

“As a result, some contract hire and leasing companies have acknowledged they have had plug-in hybrids returned, with fleets incurring early termination charges, due to poorer than anticipated MPG returns. However, the reality is that those cars are not being used in the way they were intended.”

Earlier this year the Government introduced an advisory electric rate (AER) of 4ppm for fully electric vehicles, but ignored calls to introduce an advisory fuel rate for PHEVs.

Instead, its advice is to treat them as either petrol or diesel models for mileage reimbursement purposes, which range from 10ppm to 22ppm depending on fuel type and engine size.

ACFO launched a petition on its website called for AFRs for all cars with electrified powertrains, and this is still live.

Pryor added: “It is almost certain that businesses are currently paying a higher mileage reimbursement figure to company car drivers at the wheel of plug-in hybrids than if official figures were published for those cars.

“I would urge all fleet decision-makers and the fleet industry as a whole to sign ACFO’s petition and put pressure on HMRC to introduce an appropriate mileage reimbursement rate for plug-in hybrid cars.”

Click here for electric cars and hybrids best practice and procurement insight

Leave a comment for your chance to win £20 of John Lewis vouchers.

Every issue of Fleet News the editor picks his favourite comment from the past two weeks – get involved for your chance to appear in print and win!

Login to comment


  • David Watts - 16/11/2018 11:55

    As a PHEV driver who undertakes regular business mileage and charges at every available opportunity (which essentially means just at home) and monitors my exact fuel / electric spend, I can easily demonstrate that the current AFRs are actually about right, particularly for long journeys. I win on very short journeys and lose out on long journeys.

    • rosco7 - 20/11/2018 08:28

      If the current AFR's are about right for a PHEV vehicle, then this does support the governments decision to remove incentives for them. The new Mitsubishi Outlander PHEV is a 2400cc petrol engine, so in the AFR matrix the driver will receive 22p per mile. This rate is designed to compensate a driver for a petrol vehicle doing 27mpg. I do take your point that the length of the journey when using a PHEV is a large consideration. Hence the recommendation for businesses is to simply pay a single mileage rate, and the driver has the choice as to whether to have a vehicle more or less economical than that. The HMRC do allow that, the AFR's are a guideline, and many companies use them as an independant way to control mileage expenses. The sub 2000cc petrol rate of 15p per mile is equivalent to 40mpg, and should suffice for most purposes. Just as a note 40mpg in a petrol vehicle equates to 169g/km CO2, whereas some of these PHEV vehicles have approved emissions of sub 50g/km. So it isn't a surprise that the government were going to act on that discrepancy.

  • Sage & Onion - 21/11/2018 10:22

    I'm also a PHEV driver of a 1.4 petrol base unit. I plug in once per day for a full charge and I have a 60 mile return commute. The battery range is supposed to be 31 miles, so logically you could say my fuel cost would be half that of a 1.4 petrol, so the AFR should be 6ppm. The reality is different. Whilst one a one way commute, on a certain route, I can get 200mpg out of the car on that journey, when it's out of battery I get about 35mpg. But I average 53mpg overall in real world conditions. This is caused mainly by the faster types of road I encounter on my commute. The mpg of a "normal" 1.4 petrol car would be about 45mpg in real world conditions. So my actual fuel economy of a PHEV is about 18% better than a petrol equivalent, but that is without factoring in the cost of electricity to charge each day but we can ignore that because HMRC don't recognise electricity as a fossil fuel at the moment. So maybe the AFR rates for PHEV's should be 18% less than the host engine equivalent, in this case 10ppm? But it also got me thinking that for all the extra cost of a PHEV is 2ppm a worthy saving? Most of the fuel savings of a PHEV are wiped out by the extra weight of the batteries and motors. There is no doubt that PHEV's can be a benefit and a stepping stone between fossil fuel power and electric power but if we are now seeing electric cars with battery range of 300+ miles then surely they can improve the battery range on PHEV's too.

  • Dave - 08/03/2019 09:53

    Re: Sage & Onion. I have just looked on the HMRC site and, although they do not tax for private use of fully electric cars, they do advise a rate of 4ppm to pay for private use.

Related content

Compare costs of your company cars

Looking to acquire new vehicles? Check how much they'll cost to run with our Car Running Cost calculator.

What is your BIK car tax liability?

The Fleet News car tax calculator lets you work out tax costs for both employer and employee