Company car tax explained - Frequently asked questions

Q: What are the key factors I should consider when choosing a company car?
A: Pick a small-capacity petrol or diesel engine to minimise carbon dioxide emissions - and your tax bill.

It's in your and your employer's interests to ensure the car is safe, so insist on airbags and safety equipment, and check Euro NCAP ratings on whatcar.com.

Ensure the car meets your needs: if you do a lot of motorway driving, for instance, a sporty-engined car is a waste of time and money, and if you need a big boot for carrying work about, a small coupe won't be much good.

Q: I don't have a company car but use a lot of company pool cars instead. I have never paid tax on these - should I have?
A: If you use a pool car for work business only, then you are not liable to pay any tax.

However, if you regularly use a pool car for any personal mileage, including your drive to and from work, then you should be taxed as if you have a company car.

The Inland Revenue does allow occasional personal use of a pool car tax-free - if you have to get in to work for an early start the next day, for instance.

Q: I have fitted a towbar to my car, because I sometimes tow a horsebox. My fleet manager approved the change - but will I be liable to pay tax on it?
A: No - you don't have to pay tax on any accessories costing less than £100 and fitted after the car was first registered.

Any accessories costing more than £100 must be declared on your P11D, however.