Company Car Tax Guide

What is company car tax?

Company car drivers in the UK get taxed on the value and pollution index of the car that they drive. At the moment the UK is way ahead of any other country in varying the level of tax according to a fairly precise level of pollution. Similar cars with similar prices can have very different tax levels according to the type of fuel used and the efficiency with which it is used.

How much is it?

Electric cars will pay very little tax after April 2020 whereas even a medium sized petrol or diesel could be taxed on as much as 37% of its original price. In between there are a wide range of options and manufacturers are in a constant race to lower emissions faster than the government tightens the tax thresholds.

How is it calculated?

Find the official list price of the car, excluding VED and FRF but including delivery, VAT and options. Then multiply this by the appropriate percentage applicable to the car's official CO2 emissions and fuel type. Then apply your top level of tax to the resultant benefit. It is not easy to find all this information, so we aim to cover all new UK cars in the database. The tax calculator will take you through the numbers as long as you know what car to start with.

How do I pay less tax?

Try the vehicle finder to pick the lowest taxed cars within your criteria. You will find that cheaper, lighter and more efficient vehicles are generally taxed less, with a particular advantage towards alternative fuelled vehicles. Manuals are generally better than old-style automatics, but some of the new CVTs and electronically powered clutches are even more efficient. Cashback offers and discounts do not reduce the official list price on which you will be taxed. Instead look out for special editions where options are often loaded on without an equivalent increase in list price.

For information on each type of tax relevant to drivers and fleet managers visit our Tax Pages section