Have you ever felt completely in the dark about where to start when leasing a company car? Trust me, we’ve all been there, which is why we have put together a quick guide to company car tax including a few of our favourite picks within each car range.
What is company car tax?
Each company car is taxed by the government, more commonly known as BIK tax (Benefit-in-kind tax). BIK tax is calculated based on the value of the car, the type of fuel it uses and the level of carbon dioxide it emits. Generally speaking, the ‘cleaner’ your car and the lower the price of the vehicle, the lower the BIK tax will be. The least polluting vehicles will be taxed a 5% BIK rate, whereas the most polluting vehicles will be taxed at 37%.
BIK tax = Taxable list price of vehicle (accessories Inc. (P11D)) X CO2% (see guide on Gov.uk) X Personal tax band
How does fuel affect my decision?
First of all, it is important to think about how many miles you are going to do each year in your company car. For instance, if you travel far and frequent you will realise the benefits of a diesel engine far more than you would a petrol tank, especially on motorways. Diesel in general is cheaper and far more environmentally friendly, leading to cost benefits of lower BIK tax and lower running costs. Although the P11D price of diesel cars has increased, monthly BIK tax bills are usually lower because of the lower emissions and if on rare occasion this isn’t the case, the extra cost can be recouped quickly through fuel cost savings.
Now that all the nitty gritty has been dealt with we can get to the good stuff; choosing the perfect car for you!
Skoda Octavia Estate 1.6 TDI CR Green Line III: The Octavia Estate has a very generous amount of boot space with optional extras including sat-nav, cruise control, parking sensors and DAB Radio, ticking all the big company car boxes. The Octavia boast a very high MPG of 80 and a low monthly BIK tax cost of £65, making it a very cost effective option.
Volvo V60 Plug-in Hybrid SE Lux: When fully charged the hybrid boasts a massive 148.7mpg, making the running costs incredibly low and performs best in urban areas making it a great city car option. The car qualifies for a £5,000 green car subsidy from the government, lowering its P11D value and BIK monthly tax costs.
Volkswagen Passat Estate 1.4 TSI GTE DSG: The Passat is known for its high quality interior, roomy boot size, affordable servicing and low running costs, making it one of the most popular company car options in its category. In addition it has a low BIK tax rate of 7% and the driving experience is as smooth as ever.
Vauxhall Astra 1.6 CDTi 16V ecoFLEX Tech Line (Start Stop): The ecoFLEX model offers impressive fuel economy and low emissions, which is further maximised by their stop start technology. The Astra is competitively priced and was named Compact Family Car of the Year 2016.
SEAT Leon 1.6 TDI Ecomotive SE: The Leon has been designed to be one of the safest hatchbacks on the road! The vehicle comes with a collection of safety features including the Tiredness Recognition System, ISOFIX child seat fittings, seven airbags and an automatic post-collision braking system. As well as piece of mind when driving this car, the price, style and comfort are something to be excited about.
VW Golf 1.6 TDI BlueMotion: The Golf BlueMotion is a cost effective car to run due to its impressive fuel economy and low insurance grouping thanks to its safety and security measures. The Golf has won numerous awards for price, style, comfort, safety and practicality make it one of the most popular hatchbacks to date.
BMW 1 Series 116d EfficientDynamics Plus: The BMW 1 Series is the second most popular model in the BMW range behind the 3 Series. The engine size has been reduced to lower carbon emissions lowering BIK tax and running costs. The exterior has recently undergone a facelift; the lines have been tweaked to produce a more aerodynamic shape creating further efficiency. The BMW 1 Series is the answer to a high-end hatchback offering a stylish interior and exterior, comfort, efficiency and features.
BMW 3 Series 320d efficientdynamics: The 3 Series is an ideal solution for high mileage drivers with the efficientdynamics model offering better fuel economy and lower carbon emissions. The model comes with plenty of kit for the longer journeys including 16-inch alloys, wearing low-rolling-resistance tyres, parking sensors, cruise climate control and automatic lights wipers.
Mercedes-Benz C-Class C200d SE: The C-Class features several high-end materials and finishes creating a sophisticated driving environment. The model comes with a range of optional extras on top of the additional standard equipment incorporated into the new model to maximise the driving experience.
BMW 5 Series 520d SE automatic: Renowned for its smooth drive, competitive running cost and sound build, the latest 5 Series builds on the strengths of its previous models to become a fierce competitor in the saloon range. The 5 Series is larger and more confortable yet only a fraction more expensive than the 3 Series, making it a competitively priced option within the saloon range.
Mitsubishi Outlander PHEV GX3h auto: The hybrids low running costs, practicality and spacious layout make it an appealing option for high mileage drivers. The Outlander is competitively priced, exempt from road tax and is placed in the 7% BIK tax bands, making it a very competitive company car option.