Company car tax

You can't totally avoid paying tax on it.

There are minimisation strategies, though.

(1) Van/double-cab

If you have a van or a double-cab type pickup vehicle (some of which have as much passenger space as a car) the tax liability is fixed at a low amount.

The IR are challenging this where it's blatant avoidance - easier to justify if you have a business need to deliver large items using the vehicle, than if you work in an office and never carry anything bigger than a briefcase on business.

(2) Personal leasing contract based schemes

My employer uses this approach. Instead of the company buying/leasing a vehicle and giving it to the employees (in which case the full tax is due), the employer organises personal leasing contracts for the employees (getting a better rate than they would get as individuals due to the volume of cars purchased). The employees then charge mileage to the employer at the IR maximum rates and the income isn't taxable because it's within the IR allowable amounts.

This approach works best if you are going to do lots of business mileage.


In both cases, it's mainly down to the flexibility of your employer and their desire to save you tax. If they are insisting you have a Ford Mondeo 1.8LX and that they will own it, you can't do very much at all to minimise tax.

Of course, I've neglected to mention thus far, but if you DO have a choice of vehicle, you can save tax by choosing one with low emissions (hence tax rate of 15% applies - ideally a Euro IV compliant diesel) and having a low list price.

Let us know how you get on!

You're quite right - a good company car, incurring only around 15% of list price in taxable benefit, is good value IMHO and should not cost too much in fuel to run.

If you use the car for travelling to and from work then it won't be classed as a pool car

Watch out for the IR working out your bill. Hubby has had a company car for years now, there wasn't a problem until the boss changed to his latest car. The IR didn't include it in hubby's tax code for a whole year, we rang them and they said yes, we know you have a car, it'll be included in next year's code. Which it was, but then the next year they told us that they'd worked it out wrong and now he has a MINUS tax code >:(

@troo and Murphy - there's no point telling the Revenue quickly about your new company car. Better that they find out when they are told by the company. By telling them you are just paying tax earlier. The total amount due doesn't change.

And Murphy - I 10000% agree. The original theory was that Euro III diesels were less clean than petrol cars, hence the tax differential. Then once all diesel cars are obliged to be Euro IV, the blighter reintroduces the differential to apply to all diesel cars.

Still, the 3% supplement is not enough to make a petrol car better value from a tax point of view, especially if you are paying for your own fuel.