Tag: Company cars
Company car or car allowance: which costs me less?
It depends on the car’s emissions and your tax rate, but the pattern is clear: for a petrol or diesel car the allowance usually wins, and for an electric car the company car usually wins. A £35,000 petrol car at 130g/km costs a higher rate taxpayer about £4,480 a year in benefit-in-kind tax. A £6,000 cash allowance costs the same person £2,880 in tax and National Insurance. Cited to GOV.UK, checked 20 October 2026.
How is company car tax (benefit in kind) actually worked out?
Take the car’s list price, multiply it by a percentage set by its CO2 emissions (4% for electric, up to 37% for high-emission cars), and pay Income Tax on the result at your normal rate. A £40,000 car at 120g/km gives a taxable benefit of £12,000, which costs a basic rate taxpayer £2,400 a year and a higher rate taxpayer £4,800. Your employer pays 15% National Insurance on the same figure. Cited to GOV.UK, checked 20 October 2026.
Is an electric company car still worth it in 2026/27?
Yes, and it is not close. A £45,000 electric car costs a higher rate taxpayer £720 a year in benefit-in-kind tax at the 4% rate. The same money in a petrol car costs around £5,400. The rate is rising, 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30, but even at 9% the electric car stays far cheaper to tax than any petrol or diesel. Cited to GOV.UK, checked 20 October 2026.