Company car Tax Links

There are two ways to reduce your tax bill on a company  car – choose one with a lower list price and / or one in a lower tax scale. Company  cars are taxed on their list price (not transaction price),excluding road tax and registration fee. This is recorded on a form called P11D and includes optional equipment, so think hard before loading up your car with all those extras ! Adding Leather, Metallic paint and an ‘auto’ box onto your Mercedes E220 Classic for instance will cost you more than £800 in extra tax over 3 years.

As for the tax brackets, cars are graded into percentage bands on their official carbon dioxide (CO2) emissions and their fuel type; the lower the percentage banding, the lower the tax bill.

There are discounts that use alternative fuels and a 3% surcharge for diesels that fail to meet the latest EuroIV emission Regulations.

You must add 3% to the tax band of any  diesel which does not meet Euro IV emissions standards.

These will become compulsory for new cars from Spring 2005 and all models 6 months after that. Any diesel which complies now is exempt from the penalty