Know Your EV: The Pros and Cons of Plug-in Hybrids

5 min to readElectric vehicles
Plug-in hybrids can be a useful stepping stone for drivers looking to go electric, but only if they’re deployed and used correctly. Here’s how to unlock the full potential of hybrid technology.
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Plug in hybrids

Plug-in hybrids are already a familiar technology with UK fleets, but it's not always been a straightforward relationship. Bolstered by tax incentives and freedom from electric vehicle 'range anxiety', there were 270,000 on UK roads at the end of September 2021 [1], and an ever-wider choice of new models means demand is continuing to grow.

However, they're not always a direct alternative to petrol or diesel, and differences in usage can have a significant impact on running costs.

What is a plug-in hybrid?

Plug-in hybrids feature a mains-rechargeable battery, which typically provides an electric range of 25-30 miles. Once that range is depleted, they work similarly to a full hybrid (such as a Toyota Prius), using a combination of combustion engine and electric motor assistance to maximise fuel efficiency. As a transition technology en route to decarbonising transport, the UK Government has hinted that plug-in hybrids won’t be included in the 2030 ban on sales of new petrol and diesel cars [2].

The potential advantages of plug-in hybrids include:

However, plug-in hybrids also have downsides:

How fuel efficient is a plug in hybrid?

Driver behaviour has a big effect on plug-in hybrid fuel efficiency, and published data is somewhat arbitrary. High-mileage drivers who rarely if ever plug in will struggle to come anywhere near the official figures. Equally, those who charge regularly and drive mostly within the vehicle’s electric range could achieve higher efficiency than the brochure suggests.

Emissions Analytics claims 37.2mpg fuel economy for plug-in hybrids once the electric range is used up, as an aggregated figure from its on-road testing [3]. Using this as a baseline, the following table illustrates how a higher share of electric driving impacts average efficiency.

These savings add up. If all of the UK’s PHEVs were driven on battery power for half of their country’s average annual mileage [4], it would reduce tailpipe CO2 emissions [5] by 130,760 tonnes compared to not charging at all. That’s equivalent to the annual CO2 output of 83,000 petrol cars [6].

Average fuel economy is only part of the picture. Most drivers will plug in at home, and the electricity used isn’t free, so cost per mile calculations need to include the energy used to charge the battery.

Based on a UK-wide average of 18.5p/kWh in 2021 [7], a PHEV will cost just over £2 to fully charge. Costs per mile depend on usage, as shown below.

In this example, fuel and electricity costs for the plug-in hybrid would be less than an equivalent diesel for any journey where 50% of the distance can be carried out on battery power. It would also have the advantage of driving the final few miles without any tailpipe emissions.

How do you encourage plug-in hybrid drivers to charge?

There are several simple steps to control plug-in hybrid running costs:

Ensure drivers can charge at home

The Office for Zero Emission Vehicles (OZEV) provides a 75% grant (up to £350) to support home chargepoint installations, and plug-in hybrid drivers can claim. However, from 1 April 2022, this is no longer available for single-occupancy properties, such as houses and bungalows. Click here to find out more.

Set a specific mileage rate

HMRC recommends that hybrids are treated as petrol or diesel cars when reimbursing for fuel expenses [8] and many of them will attract the highest mileage rates (22p/mile for petrol, 16p/mile for diesel) as a result. Setting a lower mileage allowance for plug-in hybrids, recognising the reduced cost of driving on electricity, could encourage drivers to plug in more often.

Use off-peak tariffs

Plug-in hybrids typically take two or three hours to charge, and can be topped up when energy is cheapest. The UK average for off-peak energy was 11p/kWh in 2021 [7], which can make a significant difference to running costs.

Check the charging cable

Chargepoints have a standardised connector, compatible with plug-in hybrid and electric vehicles. However, some plug-in hybrids are only supplied with a three-pin plug, which can make it less convenient to top up while on the road.

What are the tax benefits for plug-in hybrids?

The UK Government has steadily wound down incentives for plug-in hybrids during the last few years. However, the following still applies:

Vehicle Excise Duty

A £10 First Year Rate applies for vehicles with CO2 emissions between 1g/km and 50g/km, and all hybrids are eligible for the reduced £155 rate from the second year. However, a £355 annual supplement applies for the first five years where the list price (including options, delivery, inspection and VAT, but not the registration fees and the First Year Rate) is £40,000 or more, regardless of CO2 emissions [9].

Capital Allowances

Businesses can write off 18% of the purchase cost or 100% of rental or lease payments against pre-tax profits where vehicles emit 50g/km or less CO2 [10].

Company car tax (CCT)

CCT for low-emission vehicles includes incentives for models with the longest electric range [11]. Some comparisons are shown below.

Tax incentives for low-emission fleets are outlined in our Essential Guide to Fleet Funding and Taxation, which is available here.


[1] Department for Transport. (2021). VEH0133: Licensed ultra low emission vehicles by body type and propulsion or fuel type: United Kingdom [online] Available at: [Accessed 19 Jan. 2022].

‌[2] Department for Transport (2020). Government takes historic step towards net-zero with end of sale of new petrol and diesel cars by 2030. [online] Available at: [Accessed 19 Jan. 2022].

[3] Emissions Analytics. (2019). Plug-In Hybrids Without Behavioural Compliance Risk Failure. [online] Available at: [Accessed 19 Jan. 2022].

[4] (2021). NTS0901: Annual mileage of cars by ownership and trip purpose: England, since 2002[online] Available at: [Accessed 19 Jan. 2022].

[5] Anon. (2019). Calculation of CO2 emissions. [online] Available at: [Accessed 19 Jan. 2022].

[6] (2021). ENV0103: Average new car fuel consumption: Great Britain [online] Available at: [Accessed 19 Jan. 2022].

[7] (2021). Average unit costs and fixed costs for electricity for UK regions (QEP 2.2.4) [online] Available at: [Accessed 19 Jan. 2022].

[8] GOV.UK. (n.d.). Advisory fuel rates. [online] Available at: [Accessed 19 Jan. 2022].

[9] GOV.UK (2021). Vehicle tax rates. [online] Available at: [Accessed 19 Jan. 2022].

[10] HMRC. (n.d.). Claim capital allowances. [online] Available at: [Accessed 19 Jan. 2022].

[11] GOV.UK. (n.d.). Tax on company benefits. [online] Available at: [Accessed 19 Jan. 2022].

Published at 29 April 2022
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29 April 2022
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