VW Golf: Company car dream?

Golf: a cost-effective company car?

Charging up and down the A1 on regular basis gives you a lot of time to consider the important things in life like what you're going to have for tea when you get home, what time Family Guy's on and whether the bloke charging down the A1 in front of you is a travelling salesman.

There are tell-tale signs: he's usually not very happy, he has a suit jacket hung up on the back and he's generally driving a four-door saloon at a breakneck pace. If you are slow to get out of the way on the fast lane expect a flash of the headlights pretty sharpish.

However, I have noticed something that undermines one of the stereotypes: a lot of these types seem to be driving smaller hatches... Astras, Focuses, Mazda3's and Golfs... like mine. It seems recession, downturn, call it what you will, has necessitated downsizing from your classic four-door saloon to the smaller five-door hatch.

So, if you are a company car driver looking to scale down from your Mondeo, Passat, Insignia, what would be the tax burden? It's a legitimate question worth a decent answer.

Here's a guide to working out the company car tax on the VW Golf 1.2 TSI.

The first thing you need to know is the P11d value. This is the list price of the car minus first registration fee and road tax. It does include VAT, delivery and all optional extras. For my Golf the basic P11d price is £17,130, but the optional extras (15-inch alloys at £405, carpet mats at £75, MP3 compatible stereo at £350, fogs at £230, and pearl effect paint at £465 bring the P11d value up to £18,655.

Next, we need to work out which band the car falls into. Taking the CO2 emissions of 134g/km and comparing to the company car tax table here you can see the car sits in the 17% benefit-in-kind threshold.

So to find out how much tax you pay, simply take the P11d value and times by the percentage. In this case, that's £25,490 x 0.13 = £3171.35

Now you multiply that number by the relavent amount of tax you have to pay. If you earn less than £37,000 you're on the basic rate of 20%. If you earn between £37,001 and £150,000 you're a higher rate payer and pay 40%. Anything above that and you're an additional rate payer and are in for 50%.

So, assume I'm a 20% tax payer, you'd take £3171.35 x 0.2 = £634.27

We now have the annual tax bill. To get monthly amounts simply divide by 12.

£634.27 / 12 = £52.85 per month in company car tax, which seems fairly reasonable when you see that a PCP deal we found at www.broker4cars.co.uk was advertising a four-year deal paying £248 a month with a £1,547 deposit.

Current mileage: 10,806

Average mpg: 36.2

Alloy wheels added an extra £405, metallic paint £465.

MP3-compatible stereo cost £350 extra.

Fog lights added £230, carpet mats £75.