Compares a company car against buying privately and claiming mileage, using the benefit-in-kind percentage for the actual car.
On the figures so far
At a 4% benefit rate the company car is hard to beat — take the company car wins.
Every figure came from you, and the gap is £5,223 — well outside rounding.
Refine it in 7 questions below.
The decision
At a 4% benefit rate the company car is hard to beat — take the company car wins.
£5,223 better than own it yourself and claim mileage, on the same figures.
Each of these has to be true. Where your answers settle it we have said so; where they cannot, the test is yours to check.
The car is made available to you by reason of your employment or directorship. — we cannot tell from your answers
ITEPA 2003 s. 114
The car is available for private use. — we cannot tell from your answers
ITEPA 2003 s. 118
You know the car's CO2 figure and its P11D list price. — met, on your answers
ITEPA 2003 ss. 122–139
For an electric car, the company can fund it — the advantage is largest there. — met, on your answers
ITEPA 2003 s. 139; CAA 2001 s. 45DA
This is information, not tax or financial advice. It shows how the rules apply to the figures you entered — it does not know the rest of your circumstances. Worth checking with an accountant before you act.
Rates as at 6 April 2026 — the 2026/27 tax year.
The figures above are only as good as what sits behind them. These are the records HMRC would ask for.
| When | What | If you miss it |
|---|---|---|
| Within 28 days of the end of the quarter | File P46(Car) when a car is first provided, changed or withdrawn. | The tax code is wrong all year and the underpayment arrives later, often as a shock. |
| 6 July after the tax year | File P11D and P11D(b) for benefits not payrolled. | Penalties per 50 employees per month, and Class 1A NI charged late. |
| 22 July after the tax year | Pay Class 1A NI on the benefit. | Interest and a late-payment penalty. |
| From April 2026 | Benefits in kind must be payrolled in real time for most employers. | The P11D route is being withdrawn; check your payroll software supports payrolling before the change. |
P11D price is the manufacturer's list price including delivery, VAT and accessories. Dealer discounts do not reduce it, which is why a heavily discounted car can carry a surprisingly large benefit.
Set by CO2 emissions, with electric-only range as a further factor for plug-in hybrids. Electric cars sit at the bottom of the scale; diesels without RDE2 carry a 4% supplement.
www.gov.uk/government/publications/company-car-benefit-the-appropriate-percentage
Personal ownership means no benefit charge, but you fund the car from taxed income and depreciation is yours. The AMAP mileage rate is what the business can pay you tax-free.
www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances
The car fuel benefit is a fixed multiplier, not a measure of what you used. Unless private mileage is very high it is usually cheaper to pay for your own fuel and reclaim business mileage at advisory rates.
P46(Car) when it starts, then payrolled benefits or a P11D each year, with Class 1A NI by 22 July.
Three situations, worked through. They use the same rules as the tool above, so you can check the arithmetic against a case near your own.
The strongest case in the current system: the company deducts the whole cost in year one and the driver pays tax on a fraction of a percent of it.
£4,800 a year of tax for the use of a car you could buy outright in eight years of that tax. Personal ownership plus mileage almost always wins.
No benefit charge and a tax-free payment, against funding the car yourself. This is the comparison that matters for anything other than a low-emission car.
Every figure above comes from one of these. Where we have interpreted rather than calculated, the tool says so.
The car benefit is the P11D list price multiplied by the appropriate percentage for the car's CO2 emissions.
Class 1A NI is payable by the employer on the cash equivalent of the benefit.
New zero-emission cars qualify for a 100% first-year allowance.
Approved Mileage Allowance Payments are 45p for the first 10,000 business miles and 25p thereafter, tax free.
The car fuel benefit is a fixed multiplier and is not reduced by partial reimbursement — only by full reimbursement of all private fuel.
Yes, and it is the clearest tax-driven decision left in the employment code. A 2–5% benefit percentage against a 100% first-year allowance means the company deducts the whole cost and the driver is taxed on almost nothing.
Vans are charged on a flat rate rather than list price, and a van with only incidental private use carries no charge at all. Whether a vehicle is a van is decided on its construction, and double-cab pickups have recently been reclassified — check before assuming.
Usually not. The fuel benefit is a fixed multiplier of the same percentage, so it is only worth having if your private mileage is very high. Most drivers are better off paying for their own fuel and claiming business mileage at advisory rates.
A capital contribution of up to £5,000 reduces the list price, and a private-use payment reduces the benefit pound for pound — but the payment has to be made as a condition of the car being available, and made in the tax year.
Then it may be a pool car and carry no benefit — but the conditions are strict and HMRC applies them strictly: more than one user, not normally kept at a home overnight, and any private use merely incidental to a business journey.
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