Best company cars 2021

We round up the finest company cars across five price bands

The company car market has seen several changes over the past few years, especially with the onset of electrification. The Government is pushing motorists to reduce their carbon footprint, and rewarding business users for going green with more favourable company car tax rates. 

As more electrified vehicles hit the market, it’s important to know exactly what you’ll pay as a business user. That’s why we’re bringing you our best picks from six price brackets – and this year, given their tax benefits and with more electric cars offering genuinely usable range, we’ve included EVs in our main rundown.

Of course, this doesn’t mean pure petrol or diesel cars should be ignored, because optimisations for efficiency mean that many new models still make great company cars. 

Plug-in hybrids (PHEVs) also benefit from recent rule changes, with BiK rates here based on a sliding scale that depends on how many miles a PHEV can cover on electricity, assuming they emit between 1-50g/km CO2. These range from one per cent if the car can cover more than 130 miles on a charge (although none fall into this category yet), to 13 per cent if the car offers fewer than 30 miles of zero-emission range.

What is BiK and what will it cost me?

A company car is classed as a fringe benefit by the Government, so it incurs Benefit-in-Kind (BiK) taxation. Therefore what you pay is based on a percentage of the car’s P11D value, which is its price including options, plus VAT and delivery charges, but not its registration fee or road tax. The BiK percentage you pay is determined by the car’s CO2 emissions, with its output falling into bands that are then linked to a percentage. 

Depending on whether you pay Income Tax at the lower or higher rate (we’ve focused on 20 and 40 per cent Income Tax brackets here), the annual Benefit-in-Kind bill is then calculated at either this 20 or 40 per cent rate of the resultant figure. But as with many things in life, people often pay per month, so we’ve divided this by 12 to show you the monthly company car tax bill. 

As you’ll see from our figures, rule changes over the past few years mean that fully electric cars in particular are big BiK-busters, but plug-in hybrid models also receive favourable rates.

Time to go electric?

As a company car, an electric vehicle used not to be an obvious choice. More limited range didn’t always help, but now electric cars have become more viable – offering greater ranges on a full charge in all sectors of the market, plus faster recharging – they have become a feasible proposition.

This has coincided with a reduction in annual mileage over the last year due to the Covid-19 pandemic, meaning an EV could now be the right choice for you. Factor in that any car that’s rated at 0g/km CO2 (which is every EV on sale today) will only attract a one per cent Benefit-in-Kind tax rate, and it makes some premium machines incredibly affordable, given the kit and quality on offer.

The main driver behind turning to an electric company car is the improvement in the products, though. As manufacturers strive to get their line-ups in order before 2030, when sales of new petrol and diesel cars will be banned, they’re putting incredible effort into developing electric cars. They’re now more mainstream, which is why we’ve included EVs in our main rundown this year, rather than in a separate section.

Best company cars by price bracket

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