Car buyers wanting to purchase a plug-in hybrid electric vehicle (PHEV) should be aware that some OTR prices may increase from 01 March 2016 due to new grant levels coming into effect in the new financial year.

The prices changes are due to forthcoming changes to the Plug-in Car (and Van) Grants (PiCG). From 01 March 2016, two new grant rates will be introduced with the level of subsidy for PHEVs falling by 50 per cent from a maximum of £5,000 to £2,500. All-electric models may also be affected, although to a lesser extent than for PHEVs, with the PiCG for full EVs reducing by £500 to a maximum of £4,500.

The new PiCG rates will be awarded using a new EV classification system, each EV being classed depending on the level of CO2 emissions and the EV-only capable range.

• Category 1: CO2 emissions <50g/km and a zero emission range of at least 70 miles
• Category 2: CO2 emissions <50g/km and a zero emission range between 10 and 69 miles
• Category 3: CO2 emissions of 50-75g/km and a zero emission range of at least 20 miles

Category 1 vehicles will benefit from the full £4,500 grant while Category 2 and 3 vehicles will receive £2,500. The current grant scheme will run until March 2018 or until a certain number of each grant has been awarded.

A price cap will also be introduced in March 2016. Category 2 and 3 models with a list price of more than £60,000 will not be eligible for the PiCG, though all Category 1 vehicles will be able to have the full PiCG no matter what their cost.

Read more: Next Green Car