The 20 lowest-tax company cars

Mercedes-Benz GLC is one of the best options for a company car – Mercedes-Benz GLC

With the rising cost of living still hitting wallets and the tax burden currently higher than it’s ever been, you might be trying to find ways to reduce how much of your salary is spirited off to the exchequer. And if you’re entitled to a company car, choosing one that reduces your Benefit in Kind (BIK) liability might be a relatively easy way to do that – especially if you’re due a change in the next few months.

If that sounds appealing, the most obvious way to go is battery-electric. Government incentives for company car user-choosers are such that the cost of company car tax on electric cars is minuscule in comparison with those of any other type – and for company car drivers, that makes going electric a no-brainer.

But what if an electric car simply won’t reliably achieve the range you require? In that case, there’s always a plug-in hybrid (PHEV). PHEVs pair a medium-sized battery and an electric motor with a small petrol engine; while they have been derided as the worst of both worlds, their favourable results in government CO2 tests give them a huge tax advantage over conventional petrol or diesel cars and traditional “full” hybrids. If you don’t want a pure EV, then, a PHEV could be the way to go.

If neither suits you, there are always hybrid, petrol and diesel options, although these will obviously incur much higher tax bills thanks to their comparatively higher official CO2 ratings.

However your next company car is powered, here are the cheapest options you can choose in the UK – split into four sections: fully electric (EV); plug-in hybrid (PHEV); full hybrid (aka self-charging hybrid; and those with petrol, diesel and mild hybrid drivetrains.

So if you want to save money next time your lease is up, bookmark this page and check back, as we’ll keep it updated with the latest information.

But before that, here’s a quick primer on the ins and outs of the British company car tax rules.

How company car tax works

A car’s company tax liability is based on a combination of its official CO2 emissions test results and its price. Seems simple enough – but some of the terms used can be a bit baffling.

First up, the price. This is defined as the car’s P11D value, which by another name is its list price – the price you pay before delivery, number plates and road tax are added on to get the “on the road” price.

The value of a car’s BIK – how much of a benefit you’re getting from the use of the car in lieu of additional salary – is then calculated as an annual percentage of the P11D value. The exact percentage depends on the car’s CO2 emissions, which slot each model into a particular tax band.

If, for example, your car sits in the 8 per cent BIK tax band, your Benefit in Kind is considered to be 8 per cent of the car’s P11D value.

And just as you would be with your income, you’re then taxed on a percentage of that BIK. So if you’re a 40 per cent taxpayer, you’ll pay 40 per cent of the BIK figure each year.

Knowing the above makes it easy to work out how much you’ll pay. So for example, on a car with a P11D value of £100,000, sitting in the 8 per cent BIK band, the BIK will be £8,000, on which you’ll pay 40 per cent each year as a higher-rate taxpayer – £3,200, in other words – or half that as a lower-rate taxpayer.

The cheapest electric (EV) company cars

1. Dacia Spring

Dacia Spring: Britain’s cheapest electric car – Alex Aristei

Cheapest version: Expression Electric 45

CO2 emissions (WLTP): 0g/km

P11D: £14,995

Tax at 20 per cent: £60

Not only will the Spring be Britain’s cheapest electric car when it goes on sale here later this year, it will also cost company car drivers the least in tax of any on sale in the UK, by dint of the fact that it combines the lowest possible BIK tax band with the lowest P11D value on the market. The result? A measly £60 a year in company car tax to run one.

2. MG4 EV

The MG4 EV is a genuine five-seat family hatchback – R Parsons

Cheapest version: SE

CO2 emissions (WLTP): 0g/km

P11D: £26,995

Tax at 20 per cent: £108

It hardly seems feasible that you can get a genuine five-seat family hatchback on a company car scheme for £108 a year in tax, but that’s exactly what this entry-level MG4 EV offers. Given the 4 EV is good to drive, well equipped and practical, it’s no wonder you’re starting to see them on every street corner.

3. Fiat 500

Want a chic city runaround? Try a Fiat 500 – Fiat

Cheapest version: (RED) 24kWh

CO2 emissions (WLTP): 0g/km

P11D: £28,195

Tax at 20 per cent: £113

Want a chic city car that’ll cost you peanuts to tax? The 500 should probably top your list. Granted, its cramped back seats and tiny boot mean it isn’t the most practical option – but if you’re a young (or even not so young) man or woman about town wanting a cute car, the 500 is the one to go for.

4. Nissan Leaf

The second-generation Nissan Leaf – Sébastien Mauroy

Cheapest version: Shiro 39kWh

CO2 emissions (WLTP): 0g/km

P11D: £28,495

Tax at 20 per cent: £114

The original Leaf was at the forefront of the electric car revolution and this second-generation model keeps Nissan in the game. It recently launched this cut-price model to take the fight to the MG4; while it isn’t quite as nice to drive, at this price the Leaf is a credible alternative.

5. Renault Zoe

The Renault Zoe is a decent small EV – Renault

Cheapest version: Techno R135 ZE50

CO2 emissions (WLTP): 0g/km

P11D: £29,995

Tax at 20 per cent: £120

The Zoe is the oldest electric car here, but don’t let that put you off; it’s still a decent small EV, although its charging speeds aren’t quite as good as the competition’s. You can forgive it a lot given its low P11D value, which is what makes it so affordable as a company car.

The cheapest plug-in hybrid (PHEV) company cars

1. Mercedes-Benz C-Class

Mercedes-Benz C-Class is, surprisingly, the cheapest PHEV – Barry Hayden

Cheapest version: C300e AMG Line

CO2 emissions (WLTP): 12g/km

P11D: £52,025

Tax at 20 per cent: £520

If someone asked you what the cheapest PHEV to tax as a company car would be, chances are you wouldn’t have picked a mid-sized Mercedes-Benz saloon. But by dint of its huge battery, the C300e recorded a faintly remarkable 12g/km in government CO2 tests. As a result, even with its high P11D value, the C300e takes top spot here – making it the default choice if you want a suave executive plug-in hybrid as your company car.

2. Mazda MX-30

The Mazda MX-30 is unusual but has one of the lowest tax liabilities of any PHEV – Mazda

Cheapest version: e-Skyactiv R-EV Prime-Line

CO2 emissions (WLTP): 21g/km

P11D: £34,750

Tax at 20 per cent: £555

Mazda’s quirky little MX-30 isn’t everyone’s cup of tea, and with its unusual rear-hinged doors at the back and half-size rear seats, it isn’t the most practical option. But what it does offer is a winning combination of low CO2 emissions and a modest P11D value – as a result, it has one of the lowest tax liabilities of any PHEV on sale.

3. Kia Niro

Kia Niro: sensible and family-friendly – Kia America

Cheapest version: 1.6 GDi PHEV 2

CO2 emissions (WLTP): 18g/km

P11D: £34,925

Tax at 20 per cent: £558

Looking for a sensible, family-friendly crossover as your next company car? The plug-in Niro is a strong contender. It’s a size larger than the MX-30, yet it has lower CO2 emissions and a P11D value that’s barely any higher – all of which means it’ll cost you just £3 a month more. And while the Niro isn’t particularly special to drive, it is comfortable, spacious and well equipped – making it a particularly agreeable family car that’ll be easy on the wallet.

4. Audi A3 Sportback C-Class

The classy Audi A3 Sportback C-Class – Audi A3 Sportback

Cheapest version: 40 TFSI eSport

CO2 emissions (WLTP): 26g/km

P11D: £36,400

Tax at 20 per cent: £582

Company car drivers looking for a Golf-sized PHEV will almost certainly gravitate towards… well, the Golf. But for the time being at least, the Audi A3 is actually cheaper to tax as a company car as a result of its lower P11D value. And, of course, you get the benefit of a smarter interior with a better touch screen and premium badge on the bonnet – though it’s worth keeping in mind that the Audi’s rear seats are a touch more cramped than those of the Volkswagen.

5. Mercedes-Benz GLC

Mercedes-Benz GLC – an uxpected SUV on this list – Mercedes

Cheapest version: GLC 300 e Urban Edition

CO2 emissions (WLTP): 12g/km

P11D: £58,710

Tax at 20 per cent: £587

Bet you didn’t expect to see a chunky SUV in this list, did you? But the GLC’s presence here demonstrates just how important those CO2 test results are (or, possibly, how well Mercedes is gaming the system). The GLC’s power train is shared with that of the C-Class above and like the C-Class the huge battery means it performs extremely well in those tests – so much so that its minuscule CO2 emissions rating largely mitigates its high P11D value. If your company will fund one, then, a GLC is a smart choice as a company car.

The cheapest full hybrid company cars

1. MG 3 

MG 3: the cheapest hybrid – Jonathan Fleetwood

Cheapest version: 1.5 Hybrid+ SE Auto

CO2 emissions (WLTP): 100g/km

P11D: £18,650

Tax at 20 per cent: £922

MG has only just revealed full details of its latest 3, but the new model is expected to be a significant step up over the rather lacklustre previous-generation version. For one thing, a full hybrid power train will give it extremely low CO2 emissions; combined with the low P11D value, that’ll make it the cheapest hybrid company car.

2. Toyota Yaris

Toyota Yaris: smart to look at, smooth to drive – Toyota

Cheapest version: 1.5 VVT-i Icon Hybrid

CO2 emissions (WLTP): 92g/km

P11D: £22,125

Tax at 20 per cent: £1,008

Toyota has set the standard for hybrid power trains since it first released the Prius; no wonder it now makes some of the best. The Yaris is smart to look at, smooth to drive and even quite good fun, though its firm ride means it isn’t the most comfortable small car. But with Toyota’s reputation for reliability, the Yaris should never leave you stranded.

3. Renault Clio

The hybrid Clio can’t quite match the Yaris on CO2 emissions – but it’s more comfortable inside – Renault

Cheapest version: E-Tech Hybrid 145 Evolution

CO2 emissions (WLTP): 96g/km

P11D: £21,295

Tax at 20 per cent: £1,012

The hybrid Clio can’t quite match the Yaris on CO2 emissions, but its low P11D value largely mitigates the difference, which means it’s barely any more expensive to run as a company car. The Clio is the more pleasant of the two inside and the more comfortable on a long run – which means if you plan to spend plenty of time in your company car, it’s a great choice.

4. Mazda2 Hybrid

Mazda2 Hybrid: little more than a mildly tweaked Toyota Yaris – Matt Vosper

Cheapest version: 1.5 Pure

CO2 emissions (WLTP): 87g/km

P11D: £23,730

Tax at 20 per cent: £1,036

It should come as no surprise to find the Mazda2 Hybrid here. Unlike the rest of the 2 range, the Hybrid version is little more than a mildly tweaked Toyota Yaris – which means you get the same power train, the same interior and the same basic styling. It’s a touch more expensive to tax – but that might be a small price to pay if your nearest Toyota dealer is miles away and a Mazda dealer is closer.

5. Dacia Jogger

Dacia Jogger: a family-friendly company car that’s relatively low on tax – @GREG

Cheapest version: Hybrid 140 Expression

CO2 emissions (WLTP): 112g/km

P11D: £22,995

Tax at 20 per cent: £1,228

If you want a family-friendly company car that’s relatively low on tax, but you don’t want a plug-in model, then the Jogger is ideal. With seven seats as standard, it’s incredibly versatile; while its CO2 emissions are slightly higher than most of the other hybrids here, its low P11D value means it incurs a relatively low tax rate. What’s more, the Hybrid is the best Jogger to drive, with a more settled ride and better performance than the pure petrol version.

The cheapest petrol, diesel and mild hybrid company cars

1. Kia Picanto 

Not everyone will want to squeeze into the Kia Picanto, the cheapest car currently on sale in the UK – but this is as cheap as it gets – Kia Picanto

Cheapest version: 1.0 1

CO2 emissions (WLTP): 110g/km

P11D: £13,695

Tax at 20 per cent: £727

Not everyone will want to squeeze into the cheapest car currently on sale in the UK, but this is as cheap as it gets if you need to save money on company car tax and you don’t want a plug-in hybrid or an EV. The Picanto in this form isn’t particularly well equipped, but it is surprisingly roomy for its size and, in common with all Picantos, it’s great to drive.

2. Fiat Panda

Fiat Panda: roomy for such a small car – Fiat

Cheapest version: 1.0 Mild Hybrid

CO2 emissions (WLTP): 109g/km

P11D: £14,740

Tax at 20 per cent: £754

The Panda is getting on a bit now, but the addition of some mild hybrid power trains, plus the fact it’s particularly roomy inside for such a small car, have enabled it to stay relevant. Having said that, choosing a company car that will cost you just a little bit more tax than this will get you into a much more modern car.

3. Dacia Sandero

The Dacia Sandero is a size larger than most of its rivals here, making it a particularly practical option – Dacia

Cheapest version: TCe 90 Essential

CO2 emissions (WLTP): 120g/km

P11D: £13,795

Tax at 20 per cent: £785

At the moment, the Sandero isn’t quite the UK’s cheapest car, but it’s not far off – which goes some way towards making up for its slightly higher CO2 emissions. The Sandero’s big appeal is that it’s a size larger than most of its rivals here, making it a particularly practical option – though keep in mind that this entry-level model is very basic.

4. Citroën C3

Tjhe most affordable version of the Citroën C3 – Citroën

Cheapest version: 1.2 PureTech 83 You!

CO2 emissions (WLTP): 123g/km

P11D: £13,995

Tax at 20 per cent: £796

Oddly, this most affordable version of the Citroën C3 happens to be the one we like best. Its peppy little engine is surprisingly willing, its lo-tech interior is easy to find your way around and it’s more comfortable than most of the other cars in its price bracket. Only the cramped rear seats and small boot really count against it.

5. Toyota Aygo X

If you’re after a small car with some character, the Aygo X will suit you – Toyota

Cheapest version: 1.0 VVT-i Pure

CO2 emissions (WLTP): 109g/km

P11D: £16,130

Tax at 20 per cent: £826

If you’re after a small car with some character, perhaps the Aygo X’s pumped-up styling will suit you. This is Toyota’s attempt to imbue a city-sized hatchback with some SUV credibility and the result is a likeable little car endowed with good build quality, a decent amount of space and Toyota’s renowned reliability.

Data from Comcar

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