Your company car manager may be programmed to encourage you into a diesel every time you change your car – with the expectation that this works out better for you and the company – but this could actually cost you more in BIK tax.
More than this, diesel versions of many cars can work out pricier for the company too, with higher official fuel economy being outweighed by steeper prices. With an increase in the number of frugal small turbocharged petrol engines across both small and large cars, considering petrol power could be an instant way to cut your tax liability.
Petrol £2,250 cheaper with £40/month lower lease payments
While the diesel Audi A3 Sportback 1.6 TDI 110 Sport offers claimed economy of 70.6mpg, the slightly more powerful petrol Sportback 1.0 TFSI 115 Sport returns a still strong 60.1mpg. Look at the emissions, however, and the figures for both are identical, at 107g/km.
It’s the petrol that slots into a lower BIK band, though, as the diesel is stung with a 3% BIK tax surcharge. Throw in a list price that is £2,250 lower and monthly leasing payments that undercut the diesel by around £40 and not only does the diesel cost more to finance than the equivalent petrol but you’ll be worse off with higher tax charges, too.
Company car tax bands:
A3 Sportback 1.6 TDI 110 Sport BIK: 23%
A3 Sportback 1.0 TFSI 115 Sport BIK: 20%
Pay £1,410 less tax with petrol Audi A3 over equivalent diesel
Sign up for both cars on a three-year, 60,000-mile contract and you’ll be charged £73/£146 in BIK per month compared with £93/£185 for the diesel (for 20/40% taxpayers respectively). That means that a higher-rate taxpayer driving the petrol will pay just £5,266 overall compared with £6,676 for an A3 diesel driver – a saving of £1,410.
Lower-rate taxpayers, meanwhile, will still save a substantial £705 in tax alone over three years. The whole life cost for the petrol, according to Audi itself, is also lower, meaning that a petrol A3 should take up less of your monthly allowance through the company than the diesel version.
Three-year BIK bill for driver:
A3 Sportback 1.6 TDI 110 Sport: £3,338/£6,676 (20/40% taxpayer)
A3 Sportback 1.0 TFSI 115 Sport: £2,633/£5,266 (20/40% taxpayer)
1.0-litre petrol model surprisingly fast, refined and economical
The smallest-engined petrol A3 may be much cheaper than the diesel, but this doesn’t come across in the way it drives. The engine is smooth and quiet, but it’s also provides much stronger acceleration than you might expect. We also chalked up 48.5mpg according to the trip computer on our test, which isn’t bad for a petrol car of this size.
On the negative side, the suspension is firmer than it should be for a car of this type, with a lot more road noise than you’d hope for, though this not unique to the petrol. Thankfully, the seating position is comfortable, somewhat making up for this. The gearbox in our test car was also a little slack, meaning that smooth gear changes were slightly trickier than they should be.
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