Buy company car
- Cash equivalent: the benefit in kind for the year
- £10,200
- Appropriate percentage applied
- 30
- Income tax the driver pays on it for the year
- £4,080
Each figure on this page is HMRC's own method applied to the inputs you typed, with the rate and the page it was read from cited beside it and the date it was read. Carbikly publishes no dealer price, no lease quote and no advice on which car to take: the worked example is there to be overwritten with your own list price and band, and the rates are gov.uk's on the date cited.
To buy a company car is to put a car through the business, and the question underneath the search is whether that leaves the director or the employee better off than buying it personally. The answer turns on the same arithmetic as any company car: the car becomes a benefit in kind valued from its list price and CO2 band, the driver pays income tax on that value and the company pays Class 1A on it, and in return the company bears the purchase, the insurance, the servicing and the fuel, and claims what it can against its own tax. For a fully electric car at 4 percent the benefit is small and buying through the company usually wins; for a diesel at 37 percent it usually loses. This page is written for the director or employer weighing the purchase: what changes when the company owns the car, what the driver and the company each pay, how to compare it with buying personally, and what to record. It does not price the car, finance it or say which one to buy.
Open the Company car tax calculator Free to use. No account, no card, no trial clock.
Work the benefit in kind first, before the finance
The purchase price is irrelevant to the benefit; the list price and the CO2 band decide it. Run the car through the company car tax calculator on this site before looking at finance: a car whose benefit costs a higher-rate director more in tax each year than the saving from buying through the company is the wrong car to put through the company, however it is financed.
Set what the company bears against what the driver pays
The company pays for the car, its insurance, servicing, tyres and, if it chooses, fuel, and pays Class 1A on the benefit; the driver pays income tax on the benefit and, if the company pays private fuel, on the fuel benefit as well. Buying personally reverses all of that: the driver pays for everything and claims the approved mileage rate for business miles. The allowance worksheet on this site puts the two side by side.
Treat private fuel as a separate decision
Fuel for private miles paid by the company creates a fuel benefit charge worked from a fixed multiplier and the car's percentage, and for most drivers it costs more in tax than the fuel is worth. The usual answer is for the company to pay business miles at the advisory fuel rate and for the driver to fund private fuel, or to repay it in full by 6 July.
Record the car from the day it arrives
The P11D value from the invoice or the manufacturer's list, the CO2 figure and electric range from the V5C, the fuel type and RDE2 status, the date the car became available, any capital contribution and any private-use payments, and the driver. Those fields are the P11D, and a car bought in March is still a P11D entry for that year.
What a fleet manager asks before trusting the Buy company car
Can a limited company buy a car for its director? Yes, and the director is then taxed on the benefit in kind like any other employee, with the company paying Class 1A. Whether it is worth it is the arithmetic on this page and the calculator; whether it is right for the company's tax position is one for the accountant.
Is buying or leasing through the company better for the benefit? The benefit in kind is identical: it is worked from the list price and the band, not from how the car is paid for. Buying or leasing changes the company's own tax treatment of the cost, which is not this site's subject and belongs with the accountant.
Does Carbikly work the company's tax relief on the purchase? No. Carbikly works the benefit in kind, the driver's tax, the Class 1A and the mileage, and keeps the fleet those figures come from. Capital allowances and corporation tax on the purchase are the accountant's, and for the company's wider tax the limited company calculators on dividvo.com.
Will it keep the fleet behind the Buy company car?
Describe the fleet, the drivers and how the cars are provided, and we will say plainly whether Carbikly Pro holds that today, when it will if it does not yet, or whether what you are describing is a payroll or a lease broker and belongs elsewhere. A person writes back.