Euro 6e-bis emissions standards

Euro 6e-bis is an enhancement of the Euro 6e testing standard which calculates vehicles’ emissions of CO2 and other pollutants. It’s designed to provide a more accurate and real-world measurement from cars and vans, including plug-in hybrid vehicles (PHEVs) as part of Worldwide Harmonised Light Vehicle Test Procedure (WLTP) and Real Driving Emissions (RDE). The new standard generally results in higher, more realistic emissions ratings for many vehicles, particularly PHEVs, which impacts taxation, regulation, and fleet management decisions.

Euro 6e-bis changes how official CO₂ emissions are calculated, often resulting in higher reported emissions for many PHEV models—sometimes doubling or tripling their current figures. For example, a Mercedes C300e with just over 70 miles of electric range is advertised in Great Britain with a WLTP CO2 emissions figure of 12g/km, whereas in France this has jumped to 47g/km under Euro 6e-bis. This recalculation directly affects tax treatment, potentially increasing costs for businesses and drivers.

PHEVs currently benefit from lower tax rates over standard lease periods compared to petrol vehicles, due to their lower emissions. However, under the new standard, many PHEVs may exceed the thresholds that qualify them as ‘low-emission cars’ eligible for 100% corporation tax relief or ultra-low company car tax rates. This shift risks increasing fleet costs and complicating vehicle selection.

The UK Government has announced plans to legislate for the mandatory application of the Euro 6e-bis standard across Great Britain starting April 2026. To mitigate the tax impact this would have on PHEVs, the Treasury and Department for Transport (DfT) intend to introduce an easement policy running from April 2026 to April 2028. This easement aims to soften the increase in BiK rates for company car users during the transition period.

In Northern Ireland, where Euro 6e-bis has applied since January 2025, the easement will apply retrospectively to ensure UK-wide consistency. This coordinated approach is critical given the substantial CO₂ increases forecast by the DfT for PHEVs under Euro 6e-bis testing. For example, a PHEV currently rated at 10g/km CO₂ could see official ratings rise to 30-40g/km, and some could increase from 30g/km to as high as 90g/km. Without mitigation, this could cause company car BIK rates to spike dramatically—from 9% to 24% just from 2025/26 to post-April 2026 registration, particularly if the stated CO2 emissions for a vehicle go above the 50g/km threshold as, below that level, the BiK is calculated based on electric range.

The government consultation is pending, and final details remain subject to change, but the planned easement intends to prevent a sudden tax hike that could undermine PHEV attractiveness in fleets during this period.

Apart from tax relief changes, Euro 6e-bis affects leasing firms through capital allowance pools and flat rate restrictions on tax deductions for vehicles exceeding 50g/km CO₂. These changes may push leasing costs upward and require careful pricing strategies.

Additionally, fleets should prepare for potential inequalities arising from the timing of policy application. Employees who lease PHEVs before April 2026 might retain beneficial tax treatment, while those ordering after the new standard enforcement date could face higher costs and stricter eligibility criteria.

In summary, what do you need to know?

• The UK will mandate Euro 6e-bis emissions testing for all new car and van registrations from April 2026.
• The government will, subject to consultation, introduce a transitional easement on company car tax for PHEVs from 2026 to 2028 to soften the impact of higher emissions ratings.
• PHEVs’ official CO₂ ratings under Euro 6e-bis are expected to rise considerably, potentially increasing tax liabilities and lease costs.
• Understanding and planning for these changes will be vital to maintaining a cost-effective and compliant fleet through this regulatory evolution.

By staying informed and agile, UK fleet managers can navigate the challenges posed by Euro 6e-bis and associated tax changes, ensuring sustainable fleet operations during and beyond the transition period.