What Car Q&A May 2010 - Sporty, but affordable company car?
A) Company car tax – or ‘benefit in kind’ tax, as it’s officially called – varies depending on the price of the car (its P11D value), how much carbon dioxide (CO2) it pumps out and what type of fuel it uses.
For cheap tax bills, look for a low-CO2-emitting car with a low list price. Diesel cars generally emit less CO2 than petrols, but are charged at a high rate of tax because of the other pollutants they emit. Hybrids are taxed at a lower rate than both petrol or diesel cars, although they are dearer to buy.
Have you considered the new BMW 320d Efficient Dynamics? It’s priced at £27,245, but emits just 109g/km of CO2. That means you’ll only pay tax on £3542 annually.
The Mercedes-Benz C220 CDI Blue Efficiency SE is also worth a look. It costs £25,800 and emits 127g/km of CO2, so your taxable amount will be £4644.
Don’t fancy either of those? The Audi A5 2.0 TFSI 180 pumps out 149g/km of CO2 and costs £25,485, so you’ll pay tax on £4587.
The actual amount that’s deducted from your salary each month will depend on your annual salary.