Chapter IV of Part II of the Finance Act 1992 is amended by substituting the following for section 135C (inserted by section 168 of Finance Act 2001):

"135C.

(1) In this section -

'hybrid electric vehicle' means a vehicle that derives its motive power from a combination of an electric motor and an internal combustion engine and is capable of being driven on electric propulsion alone for a material part of its normal driving cycle;

'flexible fuel vehicle' means a vehicle that derives its motive power from an internal combustion engine that is capable of using a blend of ethanol and petrol, where such blend contains a minimum of 85 per cent ethanol.

(2) Where a person first registers a category A vehicle or a category B vehicle during the period from 1 January 2006 to 31 December 2007 and the Commissioners are satisfied that the vehicle is -

(a) a series production hybrid electric vehicle, or

(b) a series production flexible fuel vehicle,

the Commissioners may remit or repay to that person 50 per cent of the vehicle registration tax payable or paid in accordance with paragraphs (a), (aa), (b) or (c) of section 132(3).".