Joe Brewer Consulting Partner

If we ignore vehicle emissions when it comes to selecting our next company car it could be an expensive mistake

...or to turn this around, selecting your next company vehicle could be a great tax planning opportunity.

Whilst traditionally the whole concept of vehicle emissions has not been a popular subject with the larger four-wheel-drive SUV owners who have already braced themselves for the high running costs, high fuel consumption and resulting high company car tax as a company director or employee, the scene is changing, and changing dramatically.

The general rule for company directors' cars

As a general rule for company directors high emission, fuel consuming vehicles are best owned and run privately due to the high tax charges on high emissions vehicles.  But owning your vehicle privately isn’t completely straightforward!  While on the one hand it’s more tax efficient to be running your high emission vehicle privately, it’s generally more expensive and more difficult to insure a private vehicle.  Added to that, you don’t always have access to the best finance deals as a private buyer as opposed to a company. 

But low emission vehicles can change all that!  Enter hybrid vehicles…      

Take a moment to look at the example below

 

VOLVO XC90 T8 Hybrid


VOLVO XC90 Diesel
 
List price £ 60,400 £ 46,650
CO2 emissions 49 g/km 147 g/km
Annual tax charge £ 845 £ 2,705
Class 1A NIC £ 583 £ 1,867
Road tax £ nil £ 145
Better as a company car or private? Company car Private
Overall annual cost to run as a company car £ 10,561 £10,405

The interesting fact is that although the hybrid costs substantially more to buy or lease, after the tax savings the overall cost is almost identical.

So in summary if you’re looking for a car that's more tax efficient to run as a company car than to own and run privately, low emission cars are worth a serious look.

Maybe the XC90 isn’t the right car for you? 

Then take a look at some of these low emission options, which all benefit from lower tax charges than higher emission vehicles:

Volvo V60 D6 AWD Plug in hybrid 48 g/km
Volvo XC90 T8 Twin Engine 49 g/km
Tesla Model S    -
VW Golf GTE 39 g/km
VW Passat GTE 39 g/km
Toyota Prius 1.8 VVT-i  49 g/km
Toyota Yaris Excel 1.5 Hybrid E-CVT 75 g/km
Vauxhall  Ampera 27 g/km
Chevrolet Volt 27 g/km



Please note – This report is provided for information only.    No action should be taken without consulting detailed legislation or seeking independent professional advice.   Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this report can be accepted.  The example assumes total mileage of 10,000 miles pa and 10% of these are business miles.   All fuel is paid for privately and any business use reimbursed at advisory fuel rates.   Based on leased vehicle at an actual quoted rate for 10,000 miles pa.    Data taken from reliable sources but not verified.