Best cars for company car tax

Lost in a world of emissions, Benefit-in-Kind and P11D values? Let this list of best cars for company car tax unmuddy the water

James Wilson
Apr 6, 2022

Finding the best makes and models for low company car tax is no easy task. Not only does the UK government tend to move the goalposts annually, there has been a significant shakeup in the way cars are tested for their official economy and emission figures. This is important as the latter is used for company car tax calculations, while the former is an important consideration for any car purchase.

On top of the above, diesel cars have fallen out of favour in many countries due to the perception of overall emissions being worse than for petrol equivalents. The UK government now imposes additional levies on diesel-powered company cars which do not meet the latest emission standards – specifically the 'RDE2' part. For a refresher on the meaning of the different emissions-based terminology, take a read of our emissions explainer article - it clears things up no end.

Those diesel cars which are 'RDE2' compliant, and there is an increasing number, promise many of the benefits which attracted motorists to diesels in the first place (better fuel economy and lower carbon dioxide emissions) so they are well worth considering. At the other end of the spectrum, many governments are trying their hardest to promote fully-electric cars. In the UK there was zero Benefit-in-Kind tax (another term for company car tax) to pay on fully-electric cars during the 2020/2021 financial year, however the government has slowly started to increase this: it currently sits at 2% for years 2022/2023 and 2023/2024, after being 1% during the 2021/2022 tax year.

Still, one of the biggest headaches when hunting for a company car is filtering through the huge number of options to find the good ones. To save a lot of time and effort, below are eight of the best company cars on sale - two petrols, two diesels, two hybrids and two fully electric. Not only are all the options below amongst the best in their respective classes - catering for those who spend most of their time around town, those who spend all their life zooming up and down the motorway and any other combination - but they also promise low company car tax bills. Quite the collection, really.

Best cars for company car tax

1. Volkswagen Up GTI

Our pick Volkswagen Up GTI
Used deals from £10,745

P11D value £15,910 (three-door)BiK rate 27%
CO2 emissions 120g/kmClaimed economy 53.3mpg


The Volkswagen Up GTI is by far the smallest car on this list, but it's also by far one of the most fun to drive thanks to its lightweight body and 1.0-litre three-cylinder turbocharged petrol engine producing around 115hp and 200Nm of torque. Sure there are city cars out there that will come with lower company car bills, but the majority of these will be sparsely equipped or quite slow (or both).

The Up GTI, though, is neither of these - its high quality interior and powerful engine make it a city car that is capable of long trips too - perfect if you have to tackle lengthy motorway jaunts for work from time to time. 

Standard equipment includes air-conditioning, 17-inch alloy wheels, a six-speed manual gearbox and a sporty flat-bottomed steering wheel. It is worth noting, though, the Up does away with a snazzy touchscreen media unit, instead, there is a cradle to mount a smartphone. This means that if you have a rubbish phone your in-car media experience won't be great, but rather than the in-car tech getting older with every year, each time you change your phone you also get to upgrade the kit in your car.


2. Peugeot 308

Our pick Peugeot 308 1.2 110 PureTech Allure
Used deals from £7,495

P11D value £23,130BiK rate 28%
CO2 emissions 128g/kmClaimed economy 49.6mpg


Peugeot’s more recent cars are often overlooked as their ancestors were rather underwhelming. This is a shame, as the French carmaker produces some of the most economical, low emission engines out there. Petrol-powered 110hp 1.2-litre 'PureTech' versions are the cream of the 308 (which is a Volkswagen Golf-sized hatchback) crop.

Like many of the 308’s rivals (for example the Ford Focus and Renault Megane) the French hatchback offers a decent driving experience, space for four adults to sit in comfort, a large boot and pleasant styling.

Unfortunately for some, the 1.2-litre 110hp PureTech engine is only available with a manual gearbox - those after an automatic have to move up to the more powerful 130hp 1.2-litre engine which has a higher list price and hence higher company car tax bills.


3. Vauxhall Insignia Grand Sport

Our pick Vauxhall Insignia Grand Sport 1.6 Turbo D SE Nav
Used deals from £10,699

P11D value £23,565BiK rate 27%
CO2 emissions 123g/kmClaimed economy 61.4mpg


Vauxhall was well ahead of the curve in getting its entire range of diesel vehicles RDE2-compliant - but this isn’t the only reason its Insignia Grand Sport is a great option for company car drivers. The model is competitively priced, drives well and has lots of space inside the cabin and boot.

Vauxhall only recently updated the Insignia (it was an update rather than a full-blown overhaul) but part of the changes brought revisions to the engine range. It is important to note that it is these updated engines that are RDE2-compliant, just in case you have the option of buying a used car via a cash allowance.

The best engine for favourable company car tax is the 1.5-litre diesel thanks to low emissions, strong economy and being less expensive than the 2.0-litre diesel option. As for trim, SE Nav specification offers a great blend of equipment and affordability despite being the entry point to the range.


4. BMW 1 Series

Our pick BMW 116d SE
Used deals from £19,920

P11D value £25,845BiK rate 26%
CO2 emissions 119 g/kmClaimed economy 60.1mpg


The latest BMW 1 Series looks dramatically different to its handsome predecessor and it's equally different under the skin, with BMW opting for a more common front-wheel drive setup in place of its more traditional rear-wheel drive. Judged on practicality alone, though, this has improved the 1 Series no end as there is much more space inside the cabin.

It's available with a number of petrol and diesel engines (some of which can be specified with a manual or automatic gearbox) but it's the entry-level diesel that is a great company car option thanks to its impressive economy and also being RDE2 compliant.

Even though the baby BM’ isn’t the cheapest hatchback out there, it comes with an upmarket image for a fraction of the cost of bigger cars. So for those that need to keep up appearances while driving a company car, it is an excellent choice. Complimenting the higher price tag is a good helping of standard equipment including air-conditioning, LED headlights, cruise control, Bluetooth and an 8.8-inch multimedia display, so you should feel well catered for behind the wheel.


5. Hyundai Ioniq PHEV

Our pick Hyundai Ioniq 1.6 GDi PHEV Premium
Used deals Limited stock

P11D value £30,195BiK rate 10%
CO2 emissions 26g/kmClaimed economy 256.8mpg


Hyundai’s Ioniq Plug-in Hybrid (often referred to as a PHEV) came from nowhere and has helped establish the South Korean carmaker as a serious player in the world of low-emission transport. Both versions (there are only two) use the same 1.6-litre petrol engine paired with a plug-in hybrid system which can run on battery power alone for around 32 miles. Or so the official numbers claim - in reality, the numbers are likely to be slightly lower.

Keeping life simple, Hyundai only offers the Ioniq PHEV in two trims- Premium and Premium SE. Both are bursting with equipment so in the interest of low company car tax bills the former is the best option.

Standard equipment on Premium models includes dual-zone climate control, adaptive cruise control, heated steering wheel, rear parking sensors, 10.3-inch touchscreen media system (which is Apple CarPlay and Android Auto compatible) and wireless phone charging pad for suitable smartphones.


6. Mini Countryman PHEV

Our pick Mini Countryman Cooper S E All4 PHEV Classic
Used deals from £22,491

P11D value £31,825BiK rate 12%
CO2 emissions 40g/kmClaimed economy 156.9mpg


With 26 miles of electric range per charge plus a petrol engine and roadholding that is more than up to the task of tackling a twisty B road, the Mini Countryman PHEV is ideal for those who want to have their cake and eat it. By this we mean benefit from low company car tax and strong fuel economy - provided you remember to plug in regularly - plus drive a practical, desirable, relatively fast SUV.

All Mini interiors stand out from the crowd thanks to upmarket materials and stylish shapes (such as the large circular display in the middle of the dashboard) so there is little worry of feeling depressed sitting in its cockpit for hours on end when driving back and forth on work trips.

Being a plug-in hybrid, an automatic gearbox is mandatory - although it is a rather good one. All PHEV Countrymans are four-wheel-drive, too, giving you greater traction when accelerating on slippery surfaces, which may or may not be an additional bonus for you, depending how vigorously you drive.


7. Renault Zoe

Our pick Renault Zoe R110 Z.E 50 Play
Used deals from £19,700

P11D value N/ABiK rate 0%
CO2 emissions 0g/kmRange 245 miles


Gone are the days when electric cars could be little more than milk floats - they are now at the forefront of the automotive world and showing no sign of giving up their spot. The Renault Zoe is one of the few which is relatively affordable and (importantly) a viable option to replace a traditional small hatchback.

Why? Well, it has a lot to do with an official range of 245 miles from a full charge. Despite the fact real-world range will be much less, it should still be more than enough for most people, with more than 200 miles per charge likely to be realistic in everyday driving.

All models come with cruise control, automatic lights and wipers, air-conditioning and a seven-inch multimedia system (which is Android Auto and Apple CarPlay compatible) so most motorists will be more than satisfied with even the entry-level model.


8. Tesla Model 3

Our pick Tesla Model 3 Long Range
Used deals from £38,980

P11D value N/ABiK rate 0%
CO2 emissions 0g/kmRange 348 miles


Tesla is a pioneer in electric cars and battery technology, which has helped its Model 3 cement itself as one of the best electric cars on sale. Tesla originally pitched its Model 3 as the car to bring zero tailpipe emissions to the masses but unfortunately, lofty list prices put it out of reach for most motorists.

That said, this is less of a problem for company car drivers, thanks to the tax relief on battery power vehicles, which means that the tax savings can go towards any premium over a similarly sized petrol or diesel alternative. Additionally, those using a cash allowance to fund their company car can make the most of the UK government’s electric car grant.

Inside the Model 3 is very minimalistic with a 15-inch touchscreen display dominating the cabin. If anything, though, this adds a touch of sophistication. There are three versions to choose from; Standard Range Plus, Long Range and Performance. They are very much ‘say it as you see it’, so for those who do lots of miles, the Long Range version is the one to go for. Buyers looking for a brand new model should consider the updated base model, which went from being the Standard Range Plus with a 50kWh battery to simply the 'Model 3' with a 60kWh 'LFP' battery capable of around 300 miles from a full charge.

Tesla is also a leader in autonomous driving, with its Autopilot suite of technology able to control steering, acceleration and braking without human input - in certain circumstances. It is worth noting, though, that in the UK drivers still have to have their hands on the wheel and be ready to take full control at all times.

*Representative PCP finance - Ford Fiesta:

48 monthly payments of £192
Deposit: £0
Mileage limit: 8,000 per year
Optional final payment to buy car: £2,923
Total amount payable to buy car: £11,926
Total cost of credit: £2,426
Amount borrowed: £9,500
APR: 9.9%

BuyaCar is a credit broker, not a lender. Our rates start from 6.9% APR. The rate you are offered will depend on your individual circumstances.


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