Cobia Tax Guide | Company car tax examples

Here are some examples of the Benefit-in-kind (BIK) tax you may be required to pay if you purchase a car through your company and use it for personal journeys.

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As the amount of tax your company is required to pay can be significant, we often recommend our clients use their personal car for business journeys and claim running costs as this can be a more tax-efficient option.

If you do need to purchase a new car, however, the examples we have selected all offer low running costs.

How to read these company car tax tables

These tables have been designed to provide you with some general information about each car before listing how much tax you and your company may need to pay.

As providing a company car to an employee is treated as an employee benefit, it is liable for tax and national insurance contributions. An employee will also be taxed for any fuel provided by the company that is used for personal journeys.

The P11D value is the taxable amount of the benefit provided to the employee and the benefit percentage/cash equivalent stated is the amount the company would need to pay and is the maximum amount of tax they would incur for this benefit.

The annual tax is the amount the employee – including company director’s – would need to pay for the benefit in the tax year, depending on the rate they are usually taxed at.

Petrol engine – company car tax examples

For those not travelling many miles, a petrol engine is often the most cost-effective option as they tend to be less expensive to purchase than their diesel and hybrid powertrain equivalents.

Model Volkswagen Up Ford Fiesta Mini One Vauxhall Astra
Variant 1.0 Bluemotion Tech Move Up Zetec 1.0T Ecoboost 100PS 3d 1.2 One Hatchback 5d 1.0T 12V ecoFLEX Tech Line 5d
Engine size 999cc 998cc 1198cc 999cc
CO2 95g/km 97g/km 112g/km 102g/km
MPG 67.3 66 58 64
P11D value £10,735 £14,620 £14,770 £17,720
Benefit (%) 16% 16% 19% 17%
Cash equivalent £1,718 £2,339 £2,806 £3,012
Annual tax (at 20%) £344 £468 £561 £602
Annual tax (at 40%) £687 £1,991 £1,122 £1,204

In order to provide examples of more efficient petrol engines, most of these cars are smaller than the diesel examples selected and have a lower P11D value.

Diesel engine – company car tax examples

Diesel engines tend to be favoured by companies whose employees travel long distances due to these cars having lower running costs than their petrol engine equivalents.

Model Audi A3 Skoda Superb BMW 3-series Jaguar XF
Variant Sportback 1.6 TDI SE 5d 2.0TDI CR SE Business 5d 318d SE 4d 2.0d Premium Auto
Engine size 1598cc 1968cc 1995cc 1999cc
CO2 emissions 99g/km 109g/km 111g/km 109g/km
MPG 71 66 67 67
P11D value £21,680 £23,700 £29,235 £33,995
Benefit percentage 19% 21% 22% 21%
Cash equivalent £4,119 £4,977 £6,432 £7,139
Annual tax (at 20%) £824 £995 £1,286 £1,428
Annual tax (at 40%) £1,648 £1,991 £2,573 £2,856

Before buying a diesel car through your company, it’s worth considering if a car with an electric or hybrid powertrain would be suitable as this can significantly reduce the amount of tax you need to pay.

Electric and hybrid powertrain – company car tax examples

Cars with an electric or hybrid powertrain are often more expensive to purchase than petrol or diesel engine options but are taxed less than these due to emitting no or low amounts of CO2.

Model Renault Zoe Toyota Prius Tesla Model S BMW I8
Variant i-Expression Nav 5d Business Edition 5d CVT Auto 70 Rear-Wheel Drive Auto 5d Coupe 2d Auto
Engine size 0cc 1798cc 0cc 1499cc
CO2 emissions 0g/km 70g/km 0g/km 49g/km
MPG n/a 94 n/a n/a
P11D value £23,440 £24,945 £63,180 £104,605
Benefit percentage 7% 11% 7% 7%
Cash equivalent £1,641 £2,744 £4,423 £7,322
Annual tax (at 20%) £328 £549 £885 £1,464
Annual tax (at 40%) £656 £1,098 £1,769 £2,929

For many companies, the low-running costs of an electric or hybrid powertrain alone are enough to convince them to purchase one of these as a company car.

If you travel long distances, however, you’ll need to consider if these vehicles will be a practical option for getting you from one place to another.

Not what you were looking for?

Whether you’re looking to purchase a company car with a petrol, diesel, hybrid or electric drivetrain, opting for one with low CO2 emissions will help reduce the amount of BIK tax your company has to pay.

These company cars were selected based upon recommendation by Auto Express and the data was provided by Parkers’ Company Car Tax Calculator.

Regardless of the company car you’re looking at purchasing, we can provide you with advice about the most tax-efficient options for buying a car through your company.

Since 2008, we’ve been helping clients reduce their tax bills by assisting them in setting up their limited companies and advising what tax relief they can claim. This helps reduce corporation tax and increases the amount of income they can take home.

> Continue reading our guide to buying a car through your company

To discuss how we can help you make the most tax-efficient company car decision and other relief you can claim when you set up a limited company, contact us today.