Low tax company cars: 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
Apr 20, 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

Used deals from £43,490
Monthly finance from £773*

Model

90kWh 400 HSE Auto

P11D value

£74,340

Range

292 miles (claimed)

BiK rate 2019/20

16%

BiK rate 2020/21

2%

BiK rate 2021/22

1%

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 £75,000 petrol 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 head-up display, large interactive dash and comfy air suspension all found on board.

JAGUAR I-PACE BUYERS' GUIDE

2. Kia e-Niro

Used deals from £29,995
Monthly finance from £535*

Model

e-Niro

P11D value

£36,500 (est)

Range

282 miles (claimed)

BiK rate 2019/20

16%

BiK rate 2020/21

2%

BiK rate 2021/22

1%

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 seven-year unlimited mileage warranty.

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

Used deals from £13,795
Monthly finance from £216*

Model

Premium 1.6 Petrol 141PS

P11D value

£30,395

Range

39 miles (claimed)

BiK rate 2019/20

16%

BiK rate 2020/21

12%

BiK rate 2021/22

10%

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 plenty on both. Adaptive cruise control, heated front seats and automatic headlights are standard fit.

HYUNDAI IONIQ BUYERS' GUIDE

4. Volvo S90

Used deals from £26,895
Monthly finance from £380*

Model

T8 Hybrid Inscription Pro AWD

P11D value (list price)

£56,995

Range

27 miles (claimed)

BiK rate 2019/20

16%

BiK rate 2020/21

14%

BiK rate 2021/22

11%

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 lthe 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 390bhp 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

Hybrid cars fall into two categories: plug-ins (covered above) and standard hybrids. While the former needs plugging in to charge a relatively large battery pack, the latter does not. They are typically best for those who do a lot of stop/start driving as they recoup energy that is otherwise lost during braking, to charge a small battery pack.

The range this provides is normally modest, but it should be enough to get you out of congested city or town centres and on to more free-flowing roads, at which point a petrol or diesel engine will take over.

5. Toyota Prius

Used deals from £12,845
Monthly finance from £190*

Model

Active 1.8 Petrol Hybrid Auto

P11D value (list price)

£24,695

BiK rate 2019/20

22%

BiK rate 2020/21

20%

BiK rate 2021/22

22%

For many, the Toyota Prius is where it all began, with ‘all’ meaning mainstream electrification of cars. When the first Prius arrived back in 2004, it was seen as a bit of an oddity, but thanks to taxi drivers the world over adopting it as their chosen wheels, it has to be one of the most recognisable cars of the past two decades.

The latest generation’s styling tends to split opinionm, but no matter which side of the fence you sit on, it still makes a cracking company car. A comfy and peaceful driving experience plus generous equipment (such as reversing camera and auto high-beam headlights) take the edge off everyday motoring, while low CO2 emissions help keep company car tax bills low.

TOYOTA PRIUS BUYERS' GUIDE

6. Suzuki Ignis

Used deals from £6,995
Monthly finance from £115*

Model

SZ5 SHVS 4X4 MT

P11D value (list price)

£17,779

BiK rate 2019/20

25%

BiK rate 2020/21

26%

BiK rate 2021/22

28%

If you were looking for an affordable, fun, small hybrid with quirky styling, bags of equipment and a useful 4x4 powertrain for around £15,000, you are limited to one car – the Suzuki Ignis.

It doesn’t have the most impressive hybrid system, but then again it doesn’t claim to – after all, Suzuki calls it a ‘mild hybrid system’, which is there to simply boost economy. The Ignis is cheap to start with (the one detailed here is as expensive as it gets) and provided you aren’t ploughing up and down the motorway day in day out, it is more than up to the challenges of daily motoring.

SUZUKI IGNIS BUYERS' GUIDE

Petrol low tax company cars

7. Ford Focus

Used deals from £12,990
Monthly finance from £175*

Model

Zetec 1.0L EcoBoost 125PS

P11D value (list price):

£19,450

BiK rate 2018/19:

22%

BiK rate 2019/20:

25%

BiK rate 2020/21:

26%

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.

But perhaps the best news for company car owners is that specced with Ford’s 1.0-litre EcoBoost engine and 6-speed manual gearbox, the Focus emits just 107g/km of CO2. This means you will only pay tax on 25% of its list price in the 2019/20 tax year and 26% in the 2020/21 tax year.

FORD FOCUS BUYERS' GUIDE

8. Peugeot 108

Used deals from £4,504
Monthly finance from £91*

Model

Allure 3dr

P11D value (list price):

£13,910

BiK rate 2019/20

22%

BiK rate 2020/21

23%

BiK rate 2021/22

26%

The Peugeot 108 is about as good as it gets for company car drivers looking for a small petrol runaround, which won’t often go on long trips, and has low tax bills.

Thanks to a peppy yet frugal 1.0-litre petrol engine and a starting price of around £9,500, company car tax is incredibly low. That said, entry-level models aren’t bestowed with many luxuries, meaning the jump up to models further up the range – such as Allure – makes the extra expenditure worth it. Naturally, the 108 is quite a small car, but it is offered in 3- and 5-door guise.

PEUGEOT 108 BUYERS' GUIDE

Diesel low tax company cars

Eagle-eyed readers will notice that the quoted BiK rates for the following two diesel cars are beyond our 26% threshold detailed earlier – but there is a reason for this. Taken on their CO2 emissions alone, both cars would be subject to a maximum BiK rate of 26% between now and the 2020/21 tax year.

However, the government is trying to dissuade buyers from choosing diesel (due to environmental concerns), so has imposed an additional 4% levy on cars powered solely by diesel.

Should you pick petrol or diesel?

9. Vauxhall Astra

Used deals from £7,694
Monthly finance from £130*

Model

1.5  Turbo D SRi Nav

P11D value (list price):

£23,005

BiK rate 2018/19:

26%

BiK rate 2019/20:

29%

BiK rate 2020/21:

30%

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

Another reason the Astra is popular is value. The Tech Line Nav (one up from standard) costs the same as an entry-level five-door VW Golf diesel (which doesn’t even come with alloy wheels). Granted the Astra’s technology isn’t quite as slick as some of its German counterparts, but if you are after a diesel family-sized vehicle with low company car tax, the Astra is hard to ignore.

VAUXHALL ASTRA BUYERS' GUIDE

10. Nissan Qashqai

Used deals from £8,490
Monthly finance from £166*

Model

1.5 dCi [115] Acenta Premium 5dr

P11D value (list price):

£25,975

BiK rate 2019/20

28%

BiK rate 2020/21

29%

BiK rate 2021/22

35%

The Nissan Qashqai is a great car, but don’t take our word for it, take the tens of thousand Brits who buy one each year. It is so popular in fact, it was the best selling SUV in the UK during 2017 and the fourth best overall.

In Acenta Premium guise you get goodies such as Android Auto and Apple CarPlay (both used to incorporate some of your smartphone’s functions into your car), alloy wheels and dual-zone climate control. Add to that the frugal nature of Nissan’s 1.5-litre dCi diesel and the Qashqai is an excellent company car for those who spend longer than they care to admit driving on the UK’s road network.

NISSAN QASHQAI 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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