Cheapest company car: make the most of your benefit-in-kind

Choosing a more efficient company car can help you to save money on tax. Here are ten of the best options to keep costs down

BuyaCar team
Aug 10, 2021

Driving a company car is a chance for you to reduce the amount of tax you pay. It's a direction many drivers go in, but figuring out which car is going to get you the best deal is not always entirely straightforward. Company car tax, or benefit-in-kind tax (BiK), is calculated using a formula that takes the efficiency of the car into account. It's a formula that changes every year, though, so we're here to help you get your head around all the numbers.

Most cars currently on sale will be placed into what's known as a BiK percentage band, which takes into account the CO2 emissions and P11D value of the car to calculate the amount of company car tax that will be payable. The P11D price comprises the list price of the car, including VAT, but excluding the costs involved with registering the car.

If you're keen to get the best deal possible, the most exciting part about driving a company car is that the government will reward you for picking a more efficient car by charging you less tax on it. Essentially, the cheapest company cars to tax will be those with the lowest emissions figures - we're talking electric cars and plug-in hybrids while some standard hybrids will also offer some decent tax savings.

But that doesn't mean you are limited to electrified cars if you want to get a good deal on your company car tax. There are plenty of efficient petrol and diesel engines available that will also prove to be low tax, if perhaps not quite as low as zero-emission electric cars. A lower P11D value will also contribute to lower tax rates, though, so a cheap petrol car will have its merits against a more expensive electric one.

Low tax company cars

Electric low tax company cars

Electric cars are the future – or so people keep saying. They are nearly silent and emit zero emissions when motoring down the road. They normally cost a little more to buy, but they also come with bags of equipment and thanks to the lack of emissions, score very well when it comes to company car tax.

1. Jaguar I-Pace

Our pickP11D valueUsed dealsRangeBiK rate 2022/23
Jaguar I-Pace EV400 HSE£74,615From £41,300292 miles2%

 

The I-Pace is the first all-electric Jaguar and also the first all-electric luxury car to take the EV battle to Tesla. All things considered, Jaguar has done an excellent job. Even though its price means it sits nearer the top of the company car food chain, zero emissions bring the amount of tax you pay crashing down – especially compared to the likes of a similarly priced but petrol-powered Porsche Panamera.

Both inside and out you are treated to a stunning blend of Jaguar style and up-to-date design, with equipment such as a head-up display, large interactive dash and comfy air suspension all found onboard.

JAGUAR I-PACE BUYERS' GUIDE

2. Kia e-Niro

Our pickP11D valueUsed dealsRangeBiK rate 2022/23
Kia e-Niro 64kWh '3'£37,400From £30,822282 miles2%

 

The Kia e-Niro hasn’t been on the market for very long and it took a while for supply to catch up with demand. But now those early troubles are out of the way, this has quickly become one of the more popular electric SUVs. With a strong range claim and costing around half the price of the I-Pace, this is one of the best value options for a company car, full stop.

As you would expect from an all-electric car, its tech is impressive – there's adaptive cruise control, wireless smartphone charging and a collision warning system, all included as standard. There's also the small matter of Kia's unlimited mileage, seven-year warranty.

KIA NIRO BUYERS' GUIDE

Plug-In Hybrid low tax company cars

Although plug-in hybrids no longer qualify for the same BiK percentage as electric cars, they do at least still offer good efficiency with low emissions figures thanks to their capability to run on battery power.

3. Hyundai Ioniq PHEV

Our pickP11D valueUsed dealsEfficiencyBiK rate 2022/23
Hyundai Ioniq 1.6 GDi PHEV Premium SE£32,745Limited stock256.8mpg12%

 

The combination of petrol and battery power suits those who do a mix of motorway and city driving, as range anxiety (the worry you will run out of battery charge) is not an issue. There are only two specs to choose from with the Ioniq PHEV – Premium being the ‘entry-level’ model – but equipment is aplenty on both. Adaptive cruise control, heated front seats and automatic headlights are standard fit.

HYUNDAI IONIQ BUYERS' GUIDE

4. Volvo S90

Our pickP11D valueUsed dealsEfficiencyBiK rate 2022/23
Volvo S90 T8 Plus£59,790From £27,500353.1mpg8%

 

Volvo has some of the best looking cars on sale right now, and the Swedish company has long cast off its fuddy-duddy image.

Its S90 goes toe to toe with cars like the BMW 5 Series and Mercedes E-Class. The T8 hybrid model sits at the top of the range (with a near £60,000 price tag to match) and offers excellent performance thanks to around 400hp on tap. Its green credentials mean that it has one of the lowest company car tax bills in its sector for the performance.

VOLVO S90 BUYERS' GUIDE

Hybrid low tax company cars

The range of non-plug-in hybrids provided is normally modest, but it should be enough to get you out of congested city or town centres and onto more free-flowing roads, at which point a petrol or diesel engine will take over. Mild hybrids are generally incapable of electric-only motoring, though.

5. Toyota Corolla Touring Sports

Our pickP11D valueUsed dealsEfficiencyBiK rate 2022/23
Toyota Corolla Touring Sports 1.8 Hybrid Icon Tech£27,910From £24,95061.4mpg27%

 

The Toyota Prius helped to popularise the hybrid over a decade ago, however it is no longer sold new. Instead, buyers are faced with the similarly comfortable Corolla, though it's available as a standard hatchback or this estate.

It uses the same 1.8-litre petrol hybrid setup as the Prius, which emits from 103g/km CO2 in estate form, which equates to a 25% BiK rate in its most basic form. The more powerful 2.0-litre version sees a 5mpg dip in return for quicker acceleration. The tradeoff is a higher BiK rate of at least 27%.

TOYOTA COROLLA BUYERS' GUIDE

6. Suzuki Ignis

Our pickP11D valueUsed dealsEfficiencyBiK rate 2022/23
Suzuki Ignis 1.2 Dualjet SHVS SZ5£17,024From £10,25056.9mpg27%

 

If you were looking for an affordable, fun, small hybrid with quirky styling, bags of equipment and even an optional four-wheel-drive setup for around £15,000, you are limited to one car – the Suzuki Ignis.

Unlike Toyota's hybrid above, this Suzuki hybrid system is a mild hybrid, which means only a small benefit in terms of fuel economy. However, it's also significantly cheaper to buy which means less to pay in tax.

SUZUKI IGNIS BUYERS' GUIDE

Petrol low tax company cars

7. Ford Focus

ModelP11D valueUsed dealsEfficiencyBiK rate 2022/23
Ford Focus 1.0 EcoBoost 125 Titanium£24,505From £11,80054.3mpg29%

 

Ford only recently updated it Focus and it’s good news all-round. The interior has had a thorough going over, simplifying its design and bringing in a central touchscreen entertainment system.

The pick of the bunch is the 1.0-litre turbocharged 'EcoBoost' engine, which is available in 125hp and 155hp forms, as well as with or without mild hybrid tech.

FORD FOCUS BUYERS' GUIDE

8. Peugeot 208

ModelP11D valueUsed dealsEfficiencyBiK rate 2022/23
Peugeot 208 1.2 PureTech 100 Allure Premium £21,235From £14,49556.7mpg28%

 

The Peugeot 208 is about as good as it gets for company car drivers looking for a small petrol runaround. It's small enough to be reasonably economical, but large enough to cart around the family on the weekend.

There is an electric version capable of more than 200 miles from a full charge, but for drivers without access to a charging point, the 1.2-litre turbocharged petrol engine makes a lot of sense.

READ MORE ABOUT THE PEUGEOT 208

Diesel low tax company cars

Should you pick petrol or diesel?

9. Vauxhall Insignia

ModelP11D valueUsed dealsEfficiencyBiK rate 2022/23
Vauxhall Insignia 1.5 Turbo D Design £30,485From £8,99060.1mpg29%

 
The Vauxhall Insignia has long been a mainstay of the company car arena and thanks to its economical yet torquey diesel engine is still a great option for those covering big miles each year.

Every version is well equipped, including entry-level Design models which come with front and rear parking sensors, dual-zone climate control and heated seats in the front.

VAUXHALL INSIGNIA BUYERS' GUIDE

10. Volkswagen Golf

ModelP11D valueUsed dealsEfficiencyBiK rate 2022/23
Volkswagen Golf 2.0 TDI GTD DSG £35,060From £21,00054.3mpg32%

 
Despite being exposed for falsifying emission results several years ago (along with many other carmakers), Volkswagen continues to make efficient yet punchy diesel engines. There are 1.6-litre and 2.0-litre versions available in the Golf.

For a blend of performance and reasonable running costs, the GTD's 200hp diesel engine fits the bill. It reaches 62mph in 7.1 seconds (as good as some small hot hatches), is easy to drive thanks to a smooth-shifting automatic gearbox, and is capable of well over 50mpg, especially if you're the type of company car driver that does a lot of motorway driving.

VOLKSWAGEN GOLF BUYERS' GUIDE

*Representative PCP finance - Ford Fiesta:

48 monthly payments of £192
Deposit: £0
Mileage limit: 8,000 per year
Optional final payment to buy car: £2,923
Total amount payable to buy car: £11,926
Total cost of credit: £2,426
Amount borrowed: £9,500
APR: 9.9%

BuyaCar is a credit broker, not a lender. Our rates start from 6.9% APR. The rate you are offered will depend on your individual circumstances.

 

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