If you are in the position of taking a company car, be aware that there are tax implications for you, and you may be better off using your own car in the long run, so do your calculations carefully before deciding whether to take the car on offer, or take the cash from the company to buy your own.

If you are in the position of taking a company car, be aware that there are tax implications for you, and you may be better off using your own car in the long run, so do your calculations carefully before deciding whether to take the car on offer, or take the cash from the company to buy your own.

If you use a company car for private purposes and earn more than £8,500 a year, you’ll have to pay tax on it, even if a member of your family or household drives it. The amount you pay will depend on a number of factors, including fuel type, CO2 emissions, and whether you make payments for private use of the car. The more eco-friendly the car, the less tax you’ll have to pay. 

For example, a ten per cent band exists for cars which emit 120g/km of CO2 or less, and a nine per cent band for electric vehicles. Also, if fuel costs are paid for by the company, this is also taxable.

To check the rate of tax you face, go to www.hmrc.gov.uk/cars.