Company car tax explained - Ways to save

With the framework of company car tax built around environmental impact, it's no surprise that so-called green fuels earn drivers favourable discounts.

Electric cars such as the G-Wiz attract a 6% tax discount, hybrid electric cars such as the Toyota Prius 3%, and gas and biofuel cars 2%.

If you drive a classic car more than 15 years old and worth less than £15,000, the tax is calculated on its original list price. If it's worth more than £15,000, then the tax is calculated on the car's current market value.

The tax liability is calculated by engine size rather than carbon dioxide emissions: 15% for cars up to 1400cc, 22% from 1400cc to 2000cc and 32% for cars over 2000cc.

Commercial vehicles used to be given a flat rate value of £500 for tax purposes. However, from 2007 that figure was raised to £3000 - with an additional £500 to be taxed if the company also provides fuel for private use.