Low tax company cars: make the most of your benefit-in-kind

Wondering which cars save you money? We name ten great low tax company cars

Dec 11, 2018

If you're in the market for a company car then the chances are you want to get the best possible vehicle while paying as little tax as possible. The good news is that company car tax (also known as a benefit-in-kind tax) is calculated from a formula, albeit a formula that changes every year.

In short, the UK government will reward you for picking a greener car by charging you less tax on it. All-electric, plug-in hybrids and standard hybrids are naturally more environmentally friendly than traditional petrol and diesel cars, and incur less tax.

That is not to mean you have to go for an electric car to get low company car tax bills though, as smaller petrol engine cars such as the latest Ford Focus, and diesels such as the Vauxhall Astra are both powered by traditional fuel sources and are at the more affordable end of the scale.

In 2019 there will be minor changes to company car tax bands. Aside from cars which are already in the highest tax band – i.e. the worst emitting cars – almost all cars will see a three per cent increase in the proportion of its list price you pay tax on. Come 2020 however and there are larger changes due, which will make greener cars even more enticing than they are today.

Due to the altered rules that will come in the next few years, we have named ten of the best low tax company cars along with their corresponding benefit-in-kind (BiK) rates. All of the cars we have picked have a maximum BiK rate of 26 per cent based on their CO2 emissions.

Low tax company cars

All-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.

Jaguar I-Pace

Latest Jaguar I-Pace deals from £55,440
Finance from £751 per month

Model

90kWh 400 HSE Auto

P11D value (list price)

£74,940

Range

292 miles (claimed)

BiK rate 2018/19

13 per cent

BiK rate 2019/20

16 per cent

BiK rate 2020/21

2 per cent

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 onboard.
Jaguar I-Pace buying guide

Kia e-Niro

Model

e-Niro

P11D value (list price)

£36,500 (est)

Range

282 miles (claimed)

BiK rate 2018/19

13 per cent

BiK rate 2019/20

16 per cent

BiK rate 2020/21

2 per cent

The Kia e-Niro hasn’t been on the market for very long and demand could well outstrip supply thanks to affordable pricing and an all-electric range just shy of 300 miles. Waiting for your electric Niro isn’t necessarily a bad thing though, as in 2020 the proportion of the cars value you will pay tax on plummets to just 2 per cent.

As you would expect from an all-electric car, its tech is impressive – adaptive cruise control, wireless phone charger and a collision warning system are all standard. There is a seven-year unlimited mileage warranty to boot, too.

Plug-In Hybrid low tax company cars

The plug-in hybrid company car sector is arguably the most important currently. Provided emissions are low enough, the BiK rates you pay are no different to an all-electric car, until the changes in 2020 that is. Also, you need not worry about charging and electric range as much, as thanks to the smaller battery sizes charging a Plug-In Hybrid Vehicle (PHEV) can normally be done overnight from a regular wall socket.

Hyundai Ioniq PHEV

Model

Premium 1.6 Petrol 141PS

P11D value (list price)

£28,340

Range

39 miles (claimed)

BiK rate 2018/19

13 per cent

BiK rate 2019/20

16 per cent

BiK rate 2020/21

12 per cent

Until the 2020 company car tax changes, the Hyundai Ioniq PHEV sits in the lowest company car tax band.

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 buying guide

Volvo S90

Model

T8 Hybrid Inscription Pro AWD

P11D value (list price)

£58,500

Range

27 miles (claimed)

BiK rate 2018/19

13 per cent

BiK rate 2019/20

16 per cent

BiK rate 2020/21

14 per cent

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 buying 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.

Toyota Prius

Latest Toyota Prius deals from £17,000
Finance from £221 per month

Model

Active 1.8 Petrol Hybrid Auto

P11D value (list price)

£23,945

BiK rate 2018/19

19 per cent

BiK rate 2019/20

22 per cent

BiK rate 2020/21

20 per cent

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 buying guide

Suzuki Ignis

Latest Suzuki Ignis deals from £7,399
Finance from £109 per month

Model

SZ5 SHVS 4X4 MT

P11D value (list price)

£15,309

BiK rate 2018/19

22 per cent

BiK rate 2019/20

25 per cent

BiK rate 2020/21

26 per cent

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.

Petrol low tax company cars

Ford Focus

Latest Ford Focus deals from £11,200
Finance from £163 per month

Model

Zetec 1.0L EcoBoost 100PS

P11D value (list price):

£19,450

BiK rate 2018/19:

22 per cent

BiK rate 2019/20:

25 per cent

BiK rate 2020/21:

26 per cent

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 per cent of its list price in the 2019/20 tax year and 26 per cent in the 2020/21 tax year.
Ford Focus buying guide

Peugeot 108

Latest Peugeot 108 deals from £4,100
Finance from £71 per month

Model

Allure 3dr

P11D value (list price):

£12,469

BiK rate 2018/19:

19 per cent

BiK rate 2019/20:

22 per cent

BiK rate 2020/21:

23 per cent

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 buying 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 per cent 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 per cent 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 per cent levy on cars powered solely by diesel.

Should you pick petrol or diesel?

Vauxhall Astra

Latest Vauxhall Astra deals from £5,950
Finance from £107 per month

Model

1.6 CDTi 16V ecoTEC Tech Line Nav 5dr

P11D value (list price):

£20,850

BiK rate 2018/19:

26 per cent

BiK rate 2019/20:

29 per cent

BiK rate 2020/21:

30 per cent

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 buying guide

Nissan Qashqai

Latest Nissan Qashqai deals from £6,577
Finance from £127 per month

Model

1.5 dCi [115] Acenta Premium 5dr

P11D value (list price):

£24,295

BiK rate 2018/19:

25 per cent

BiK rate 2019/20:

28 per cent

BiK rate 2020/21:

29 per cent

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 buying guide

          

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