The alternative would be either shelling out a substantial lump sum for a car of your own or facing hefty monthly re-payments to buy that car.
The downside of owning a company car, of course, is that you have to pay the taxman for the privilege because he considers it a benefit of your job.
If you have a choice of having a company car or getting one of your own it’s always worth doing the maths to see just how the figures stack up.
Any car dealer will give you the figures for buying your own car but how do you calculate company car tax?
The tax liability of a car is based on the CO2 emissions of the vehicle and the vehicle’s P11D price, as opposed to the on-the-road price.
The cleaner the car’s engine is the lower the car’s CO2 emissions and the less company car tax you’ll pay.
The higher the CO2 emissions, on the other hand, the more company car tax you can expect to pay.
The amount of company car tax – or benefit-in-kind – depends on the CO2 band your car falls into. These range from 9% for zero emission cars such as electric vehicles (although this will increase next year) to 37% for petrol cars with CO2 emissions of 185g/km and above.
Diesel models are also subject to a 3% surcharge to take account of their sootier exhausts so the top 37% band applies above 175g/km this year.
For the full table of company car tax bands, click on the highlighted link for our Company Car Tax Tables.
Emission figures are rounded down to the nearest 5g/km. So if you drive a petrol car with CO2 emissions of 112g/km, the figure is rounded down to 110g/km (the 21% company car tax band for 2017/18) .
You then multiply the P11D cost of the car by the percentage tax band to arrive at the taxable value – and then multiply by your current rate of tax (presently 20% or 40%). Here are two examples on how to calculate company car tax: