Euro 6e bis Standard: Effects on taxation and emission thresholds 

At its core, the new testing regime changes how vehicle CO₂ ratings are calculated, with some PHEV models seeing their figures double – or even triple.

This has major implications for tax categorisation. Data from Ayvens’ 2025 Tax and Funding Guide illustrates how such steep increases could translate into significant additional costs for businesses and employees alike. 

Currently, companies can cut their tax bills by nearly half over a typical 48-month lease (2025–2029) by choosing a PHEV over a petrol alternative, thanks to lower emissions ratings.

A substantial revision to those figures under the new standard could mean thousands of pounds in additional tax over the same period. 

Zooming in further, many vehicles that currently qualify as ‘leased low-emission cars’ -defined as emitting 50g/km of CO₂ or less – may no longer meet the threshold for 100% corporation tax relief.

The same risk applies to vehicles leased through salary sacrifice schemes. Today, cars emitting up to 75g/km are taxed as company cars at ultra-low rates. That advantage may soon disappear if those vehicles breach the emissions ceiling. 

Euro 6e Standard – Additional complexities 

Beyond the main implications, Euro 6e bis introduces some other specific challenges. Companies deducting their leasing costs from taxable profits are subject to a flat 15% restriction on vehicles that emit over 50g/km CO₂.

Under the new standards, many leased PHEVs will again cross the threshold, turning what was a fully deductible business expense into something more costly. 

Additionally, leasing companies face complications regarding capital allowance pools which may affect pricing and leave leasing firms financially exposed.

Because the transition in testing standard is yet to be formally confirmed by Government, leasing companies are currently quoting vehicles at a particular price point that is reflective of the anticipated tax relief that comes with the leasing of a low-emission vehicle (tax relief over a five-year period, rather than a thirty-year period).

On an individual level, there’s the risk of unequal treatment among company employees due to the regulatory change.

For example, one employee may be using a vehicle they obtained through salary sacrifice under current standards, but if another employee attempted to do so through the scheme under the new standard in a years’ time, they may well find the same car to be ineligible for that scheme as it now sits outside the emissions threshold.  

How can leasing companies mitigate and work around the challenges posed by the impending change to testing standards?