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Company Car Tax Rates 2021

When you get a brand new company car via one of our business leasing deals, we’ll take care of almost everything. The car will come in pristine condition, your monthly payments will all be arranged through your company, and even maintenance and servicing can be covered. 

One thing we won’t sort is your company car tax. That’s a cost that will be paid separately from your agreement with us, so it’s good to know how much it’s likely to be and what cars could help you save on it. 

Our company car tax calculator guide will tell you all you need to know. 

business man driving company car

How do I calculate my company car tax?

To work out how much tax you’ll pay on a company car, first you need to know the car’s total value. This is then multiplied by a tax rate based on its CO2 emissions, called a BIK (benefit in kind) rate. Finally, that’s multiplied by your income tax rate - 20% for lower rates, 40% for higher rates and 45% for additional rates. 

For example, if your car was worth £20,000, with a BIK rate of 15% and an income tax rate of 20%, you’d pay company car tax of £600 a year (20,000 x 0.15 x 0.20). 

How do I pay company car tax?

Your company car tax payments will come out of your company’s PAYE system, with your tax code being updated to reflect the new benefit. It’s your responsibility to let HMRC know that you’ve got a company car so that they can update this. 

What are the company car tax bands for 2021?

Your company car tax band will depend on the amount of CO2 it emits. For cars that produce more CO2, you will pay a higher rate, while cars with low emissions such as electric and hybrid vehicles can expect to pay much less. 

See the below table for our full list of company car tax rates for the 2020/2021 financial year and beyond. 


CO2 emissions g/km Electric range 2020-21 2021-22 2022-23
0 n/a 0 1 2
1-50 >130 miles 0 1 2
1-50 70-129 miles 3 4 5
1-50 40-69 miles 6 7 8
1-50 30-39 miles 10 11 12
1-50 <30 miles 12 13 14
51-54 13 14 15
55-59 14 15 16
60-64 15 16 17
65-69 16 17 18
70-74 17 18 19
75-79 18 18 20
80-84 19 20 21
85-89 20 21 22
90-94 21 22 23
95-99 22 23 24
100-104 23 24 25
105-109 24 25 26
110-114 25 26 27
115-119 26 27 28
120-124 27 28 29
125-129 28 29 30
130-134 29 30 31
135-139 30 31 32
140-144 31 32 33
145-149 32 33 34
150-154 33 34 35
155-159 34 35 36
160-164 35 36 37
165-169 36 37 37
170 or more 37 37 37

Company car tax on electric cars

Cars that produce low or zero carbon emissions, such as electric and hybrid cars, can expect to save considerable sums on their company car tax. 

For the year 2020, tax on cars with zero emissions was 0%, but this has increased to 1% in 2021 and 2% in 2022. Still, there are considerable savings to be made, especially when coupled with our electric and hybrid leasing deals

When it comes to what car is best for company car tax, it looks like green is the way to go.


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