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Company car tax: planning ahead

  • Are you thinking about the next four years when picking a company car?
  • Changing BIK tax bands should be an important consideration
  • The diesel surcharge remains until 2021.

Choosing your next company car is exciting and lets be honest: the last thing anyone wants to think about is how much tax you're going to pay.

But it's an important consideration and it’s not just about picking an affordable monthly payment for this year, either. With tax bands rising you need to ensure that the car you choose still keeps tax bills low for the next three or four years to come.

Diesel supplement

Since April 2002 company car tax has been based on a car's P11D price and official CO2 emission figures.

There's also a three percent supplement charge for diesel cars added as they are deemed dirtier than petrols. The surcharge was due to be scrapped in April 2016 but will now remain in place until 2021.

Petrol engines have been catching up with diesels for fuel economy and CO2 emissions and can sometimes be a more cost-effective choice if you don’t travel a lot of miles each year.

Changing BIK Tax bands

BIK tax bands are changing each year and apart from the diesel supplement being removed - which will see most diesel cars fall one BIK tax band for the 2016/17 tax year - they generally go up.

It’s important when you look to choose your next company car that you not only look at what you'll be paying for the next 12 months, but also look at the amount you will be paying over the next three or four years.

The good news is that company car tax bands are published well in advance so you should be able to calculate your monthly tax costs easily.

Petrol vs diesel

Although petrol engines have been catching up over recent years, diesel is still king of the company car park because of the higher fuel economy and lower CO2 emissions.

Retail buyers would need to travel a fair amount of miles each year to offset the premium for diesel cars, but for company car drivers diesel cars are not only cheaper to tax in most cases, they are also more economical meaning less visits to the fuel station too.

However new petrol engine like Ford's EcoBoost engine are giving diesel a proper run for its money and because the P11D prices are generally cheaper, our below example mean it's the cheapest option overall.

 

Petrol

Diesel

 

1.0 EcoBoost Zetec

1.5TDCI Zetec

P11D price

£18,740

£19,440

MPG

60mpg

74mpg

Power

123bhp

118bhp

CO2 emissions

108g/km

98g/km

2015/16 BIK tax band

16

17

2015/16 monthly tax cost*

£49.97

£55.08

2016/17 BIK tax band

18

19

2016/17 monthly tax cost*

£56.22

£61.56

2017/18 BIK tax band

20

21

2017/18 monthly tax cost*

£62.47

£68.04

2018/19 BIK tax band

22

23

2018/19 monthly tax cost*

£68.71

£74.52

BIK tax bands

Below is a list of the BIK tax bands for the next four years - remember to add the three percent diesel surcharge for the 2015/16 tax year. 

BIK %

2015/16 

2016/17 

2017/18

2018/19 

 

CO2 (g/km)

CO2 (g/km)

CO2 (g/km)

CO2 (g/km)

0

0

N/A

N/A

N/A

5

0-50

N/A

N/A

N/A

6

N/A

N/A

N/A

N/A

7

N/A

0-50

N/A

N/A

8

N/A

N/A

N/A

N/A

9

51-75

N/A

0-50

N/A

10

N/A

N/A

N/A

N/A

11

N/A

51-75

N/A

N/A

12

N/A

N/A

N/A

N/A

13

76-94

N/A

51-75

0-50

14

95-99

N/A

N/A

N/A

15

100-104

76-94

N/A

N/A

16

105-109

95-99

N/A

51-75

17

110-114

100-104

76-94

N/A

18

115-119

105-109

95-99

N/A

19

120-124

110-114

100-104

76-94

20

125-129

115-119

105-109

95-99

21

130-134

120-124

110-114

100-104

22

135-139

125-129

115-119

105-109

23

140-144

130-134

120-124

110-114

24

145-149

135-139

125-129

115-119

25

150-154

140-144

130-134

120-124

26

155-159

145-149

135-139

125-129

27

160-164

150-154

140-144

130-134

28

165-169

155-159

145-149

135-139

29

170-174

160-164

150-154

140-144

30

175-179

165-169

155-159

145-149

31

180-184

170-174

160-164

150-154

32

185-189

175-179

165-169

155-159

33

190-194

180-184

170-174

160-164

34

195-199

185-189

175-179

165-169

35

200-204

190-194

180-184

170-174

36

205-209

195-199

185-189

175-179

37

210+

200+

190+

180+

Calculating company car tax

Calculating your company car tax is easy with the Parkers company car tax calculator. Simply enter the car you wish to calculate the tax for by using the drop down menus plus the amount of tax you pay - 20, 40 or 45 percent. 

Click here to use our company car tax tool. 

Need more help? These articles may help.

Your complete guide to BIK tax

Saloon cars that cost less than £75 in BIK

Executive cars for less than £150 a month

Top low-tax diesel company cars

Cash vs company car

 

*Monthly tax costs are based on a 20 percent tax payer