Search our reviews
Best pick-up trucks in the UK 2023
Fleet and company car tax explained plus BIK rates up to 2027/2028
How to use an electric car or van as a company vehicle
What is the company car tax on an electric car in the UK?
You'll be taxed at your income tax rate on a percentage of the car's P11D value, which is the list price minus the first year's Vehicle Excise Duty and the registration fee. The percentage is based on the amount of CO2 your car emits, with dirtier models costing more.
Choosing a company car is easier than buying privately, not least because servicing, maintenance, insurance and breakdown cover are taken care of for you. However, you'll have a wider choice of models if you take a cash allowance and, if you buy outright, an asset that you can sell in the future.
Electric vehicles make the cheapest company cars, but diesels are more suited to high-mileage use, while plug-in hybrids (PHEVs) tread the middle ground on tax but don't leave you with the range anxiety that fully electric cars can. Petrols tend to make the least sense.
The amount of company car tax you pay depends on your earnings, plus the value of your car and how much CO2 it emits, while for plug-in hybrids (PHEVs) the electric-only range is also a factor. But essentially, the cheaper the car and the less it emits, the less you'll pay.
Driving your own car, rather than a company supplied one, on business brings the next service closer, increases wear and tear, and adds miles that increase depreciation. The approved mileage allowance payment is the amount you can be compensated without having to pay tax on it.
Advisory fuel rates are the Government's recommended rates for reimbursing employees' fuel costs while driving a company car on business. They can also be used if employees need to repay the cost of fuel used for private travel.