As Britain tightens emissions rules and updates motoring taxes, hybrid choices are evolving fast. Plug-in Hybrid Electric Vehicles (PHEVs) promise meaningful electric-only miles and low Benefit-in-Kind (BiK) rates (depending on range and CO2), while Mild Hybrid Electric Vehicles (MHEVs) deliver simpler ownership and solid fuel economy without needing to plug in. Understanding the running costs, tax treatment, and usage realities in late, 2025 is essential—especially for fleet and leasing decisions.

Key takeaways (UK, late 2025):

• Electricity prices: Ofgem’s Q4 2025 cap implies approx. 26.35p/kWh, with standing charges around 53.68p/day. Regional variation applies. 
• Petrol prices: Mid-month June 2025 averages were around 131.5p/litre petrol (137.5p diesel). December trackers show petrol at at around 137p/litre. 
• VED from April 2025: EVs/PHEVs/MHEVs now pay standard rates; hybrid £10 discounts removed. First year rates for low-emission cars increased; standard rate £195 thereafter.
• Company car BiK (from 2025/26): EVs move to 3% rising in later years; PHEVs (1–50 g/km) vary by electric range now and consolidate to 18% in 2028/29 and 19% in 2029/30. 
• Real world PHEV usage: Independent studies show many PHEVs emit 3–5 × WLTP CO2 and burn more fuel than certification implies (especially company cars), underscoring the importance of plugging in consistently.

How PHEVs and MHEVs Work (quick refresher)

• PHEV: Larger batteries that you plug in; delivers 20–50 miles of electric only range (model dependent). When charged and used correctly, short trips can be near-zero fuel. But when not charged, real-world fuel and CO2 can climb sharply vs official ratings. 
• MHEV: A conventional engine supported by a small motor and 48V battery that cannot drive the car independently. It harvests braking energy and assists acceleration to improve mpg and CO2 modestly—no charging needed. Real-world mpg for mild hybrids often sits on average between 45 – 60 mpg depending on size and use. 

Cost per Mile: PHEV vs MHEV (UK 2025)

To put numbers in context, I modelled cost per mile using late-2025 UK inputs:

• Electricity (home, Q4 2025 cap): 26.35p/kWh; off-peak EV tariffs can be approx. 7.5p/kWh; public rapid charging approx. 75p/kWh (illustrative averages). 
• Petrol: Average 137p/litre (Dec 2025 tracker). 
• Efficiency assumptions:
  • PHEV on electric: Approx. 3.5 miles/kWh (typical UK mixed driving, varies by model/weather). 
  • PHEV on petrol: Approx. 45 mpg (real-world when battery depleted; varies by segment). (Based on UK real-world trends; certification gaps are documented by ICCT) 
  • MHEV on petrol: Approx. 50 mpg (typical modern mild hybrid family car). 

Read-outs (approx., modelled):

• PHEV (home electric): £0.08/mile
• PHEV (off-peak electric): £0.02/mile
• PHEV (public rapid): £0.21/mile
• PHEV (petrol when depleted): £0.14/mile
• MHEV (petrol only): £0.12/mile

Why the spread? Electricity price varies dramatically by tariff and charger type; home/off-peak makes PHEVs compelling, while frequent rapid charging can erode savings. 

Annual Running Costs (energy/fuel only)

We also modelled mixed-use scenarios (how often a PHEV is actually driven on electric) across common annual mileages. This is crucial because real-world PHEV savings depend on plugging in consistently, something studies show is not always happening—especially for company cars. 

Illustrative results (rounded):

• 6,000 miles/year

  • PHEV (70% electric @ home): £570
  • PHEV (50% electric @ home): £720
  • PHEV (30% electric @ home): £870
  • PHEV (70% electric @ public): £1,410
  • MHEV (petrol only): £720

• 9,000 miles/year

  • PHEV (70% electric @ home): £860
  • PHEV (50% electric @ home): £1,080
  • PHEV (30% electric @ home): £1,300
  • PHEV (70% electric @ public): £2,110
  • MHEV (petrol only): £1,080

• 12,000 miles/year

  • PHEV (70% electric @ home): £1,140
  • PHEV (50% electric @ home): £1,440
  • PHEV (30% electric @ home): £1,740
  • PHEV (70% electric @ public): £2,820
  • MHEV (petrol only): £1,440

Interpretation: If most charging is at home (or off-peak), a PHEV generally beats MHEV on fuel/energy costs. If public rapid charging dominates, the cost advantage can disappear. 

Beyond Fuel: Taxes & Incentives (2025–2030)

Vehicle Excise Duty (VED)

From April 2025, EVs and hybrids moved onto standardised VED: £10 in first year for zero-emission, then £195 standard rate; hybrid discounts removed; expensive car supplements apply to high list?price vehicles.

Company car BiK

• EVs: 3% in 2025/26, rising in later years (4% in 2026/27, 5% in 2027/28, 7% in 2028/29, 9% in 2029/30).
• PHEVs (1–50 g/km): banded by electric range today (e.g., 6–15%), but consolidating to 18% in 2028/29 and 19% in 2029/30.
• Re-testing impacts: UK alignment with Euro 6e?bis and WLTP/OBFCM can push real-world CO2 for some PHEVs higher, affecting BiK bands; temporary easements are discussed.

Fleet tip: The best BiK outcomes for PHEVs still rely on long electric range and consistent charging behaviour. Company drivers who rarely plug in can lose expected tax and fuel savings. 

Real-World Usage: Why Plugging In Matters for PHEVs

Large EU/UK datasets show that average PHEV real-world fuel consumption and CO2 are significantly higher than WLTP type-approval, 3 – 5× in many cases, because drivers do not charge as frequently as assumed and drive more on petrol. Company cars show the biggest gap. 

The Energy & Climate Intelligence Unit (ECIU) found UK best-selling PHEVs’ real-world fuelling costs are approx. £672/year higher than equivalent BEVs and approx. £500/year more than manufacturers’ claims when actual use is considered.

Advantages of PHEVs over MHEVs (when used as intended)

1. Electric-only capability for short trips
   Daily city commutes can be covered largely on electricity—lower noise, local emissions, and energy cost per mile (especially off-peak/home charging). 

2. Potentially lower running costs
   With home or off-peak tariffs, PHEV electric miles can be 2 – 6p/mile vs ~12 – 14p/mile for petrol. Public rapid charging raises electric miles to approx. 19–21p/mile, so charging strategy is pivotal. 

3. Company car BiK advantages (near term)
   In 2025–2027, many PHEVs with long electric range can attract lower BiK bands than equivalent MHEVs — subject to CO2 and range thresholds. 

4. Future-proofing vs tightening urban policies
   PHEVs offer ULEZ resilience when used electrified for urban segments, and they are a bridge to full BEV adoption for drivers wary of range. 

When an MHEV may be the smarter choice

• No home charging or off?street parking: If you rely on public rapid charging, a PHEV’s running costs may exceed an efficient MHEV. 
• Lower upfront cost & simpler ownership: MHEVs avoid charging hardware and potential home installation costs, yet still deliver respectable an approx. 50 mpg real-world for many models.
• Tax convergence: With VED changes and future BiK consolidation for PHEVs, the tax advantage gap narrows from 2028 onward.