Which vehicles have the cheapest company car tax bills?

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4 mins read

3 April 2023

Despite the soaring cost of living, driving a company car has never offered better value for money – as long as you’re prepared to go electric.

The UK is on course to phase out sales of new petrol and diesel cars by 2030, and it’s already taking steps to steer drivers towards the vehicles with the lowest possible CO2 emissions. Fleets and businesses, who account for almost half of all new car registrations, are firmly on the radar.

Company car tax bands were overhauled in April 2020, introducing a set of ultra-low rates for vehicles emitting 50g/km CO2 or less – which includes all electric and most plug-in hybrid models. Going electric offers a 90% reduction in Benefit-in-Kind bills compared to a petrol or diesel car, and fleets have taken notice. According to the SMMT, two thirds of new electric cars were registered to fleets in 2022.

With a wide range of vehicles to choose from, there’s also no need to compromise on your priorities to take advantage of those incentives. Here’s our pick of the best options.

Autocar's company car tax calculator, showing exactly what you'll pay for each and every make and model

Cheapest Overall: Smart EQ Fortwo

If tiny Benefit-in-Kind bills are your priority, then you won’t find any cheaper than a Fortwo. Its compact footprint, 80-mile range and lack of rapid charging are best suited to city-dwellers but, unlike a quadricycle (such as the Citroën Ami) it can reach motorway speeds when needed. The Forfour is only slightly pricier if you need four seats.

Monthly Benefit-in-Kind (20%/40%): £7.77/£15.55

Also consider: MG4 EV SE Standard Range

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In value for money terms, the MG4 makes a good case for paying a little extra tax. Similar in size to the Volkswagen ID.3, it has space for a family of five, a 218-mile range and charges five times faster than the Smart.

Monthly Benefit-in-Kind (20%/40%): £8.83/£17.66

Cheapest motorway cruiser: MG4 EV SE Long Range

MG’s game-changing hatchback combines Tesla-like touring capability with a list price closer to petrol and diesel cars. The larger of its two battery options offers a range of 280 miles, with 201bhp, adaptive cruise control and the usual Apple and Android smartphone connectivity to make light work of long drives. Plug it into a rapid chargepoint, and you’ll get 200 miles back in around half an hour.

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Monthly Benefit-in-Kind (20%/40%): £9.81/£19.63

Also consider: Hyundai Kona Electric Premium (64kWh)

The Kona has been with us for almost six years, but it’s still a great all-rounder. It’s the 300-mile car with a list price under £40,000, and it’s one of the most efficient EVs on the market – so you’ll be spending less time and money at expensive motorway chargepoints.

Monthly Benefit-in-Kind (20%/40%): £12.57/£25.13

Cheapest tow car: Polestar 2 Standard Range Single Motor

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Towing would once have been the Achilles heel of electric cars, but it’s becoming a more common feature in new models. If you need to tow a four-berth caravan, then the entry-level Polestar 2 provides the most pulling power for your money, at up to 1,500kg (braked). Options include a semi-electric towbar and roof rack with a 75kg weight limit, and it’ll travel 300 miles to a full charge once you unhitch the trailer.

Monthly Benefit-in-Kind (20%/40%): £14.97/£29.93

Also consider: Hyundai Ioniq 5 Premium 217hp RWD 77kWh

There’s more to the IONIQ 5 than futuristic styling. It can pull an extra 100kg of trailer weight compared to the Polestar 2 and, unlike the base-spec version of its Kia EV6 sister car, there’s an outlet for you to run a kettle off while you’re taking a break.

Monthly Benefit-in-Kind (20%/40%): £15.03/£30.06

Cheapest seven-seater: Citroën ë-Berlingo XL Feel

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Although it’s based on the ë-Berlingo van, Citroën’s electric MPV feels closer to a car when you’re behind the wheel. It offers a range of 174 miles and rapid charging, seven full-size seats, including six that fold and two that can be removed, and sliding doors for easier access in tight spaces. Peugeot and Vauxhall have similarly priced variants of the same vehicle, if you’re not keen on Citroën’s family styling.

Monthly Benefit-in-Kind (20%/40%): £11.09/£22.17

Also Consider: Citroën ë-SpaceTourer M Business Edition

If you need as much room on board as possible, then the entry-level ë-Spacetourer is the cheapest way to transport nine adults around. However, there is a huge price gap if to step up to the more car-like trim levels – and those only get eight seats.

Monthly Benefit-in-Kind (20%/40%): £12.35/£24.70

Cheapest performance car: Tesla Model 3 Performance

It’s one of the fastest accelerating production cars on the market but, following a recent price cut, the flagship of the Model 3 line-up is staggeringly good value as a company car – if your choice list allows it. This compact executive saloon will reach 62mph in 3.2 seconds, offers enough space for the family and has the advantage of Tesla’s excellent Supercharger chargepoint network. It’s hardly surprising that it’s the UK’s most popular electric car.

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Monthly Benefit-in-Kind (20%/40%): £19.30/£38.60

Also consider: Polestar 2 Performance Pack

The Polestar 2 is slightly slower than the Model 3 on paper, accelerating to 62mph in 4.2 seconds with the help of two motors and 469bhp. However, it gets fully adjustable Öhlins suspension and huge Brembo brakes and a slightly longer range of up to 367 miles.

Monthly Benefit-in-Kind (20%/40%): £19.31/£38.62

Alex Grant