Which is best for company car tax: petrol or diesel?

When you get a company car, you have to pay company car tax. And naturally, you’d want to keep your company car tax as low as possible.

But, is petrol or diesel better for low company car tax?

In this article we compare the two fuel types and look at which one is best if you want low company car tax.

What affects the cost of company car tax?

Before we look at petrol and diesel individually, we need to know what affects the cost of your company car tax.

Company car tax is based on three things;

  • The P11d value of the car
  • Its CO2 emissions
  • Your personal tax band
Business man wearing glasses and using a calculator - mileage

The general rule for company car tax is the lower the CO2 emissions the lower your company car tax. Therefore, whether you choose a petrol or diesel car can impact how much your company car tax costs.

How do petrol cars affect company car tax?

Petrol cars are more suited to those who are doing short journeys. So, if you need your company car for driving around the city or to do a short commute, then you’re definitely better off looking at a petrol car. Also, if you’re looking at small city cars then you will find that many of these do not have a diesel version.

So, how does getting a petrol car affect your company car tax rate? For a long time, petrol cars have been considered less efficient than diesel cars and this has been reflected in the current company car tax bands, so you could argue that if you get a petrol car you will have to pay more in company car tax.

But is this the case?
You could argue that yes it is, but you could also argue that the P11d value also comes into play. The P11d value is;

man wearing a suit ticking off checklist
  • The car makers list price
  • VAT
  • Delivery charges
  •  Any additional extras (sat-nav, for example)

City cars, of which there tends to be only petrol versions of the car, tend to be considerably cheaper than the larger, more executive, diesel cars. This means that their P11d value could be less than the diesel car that emits lower emissions.

Therefore, you could end up paying the same amount in company car tax with a petrol car that has a low P11d value as you would if you had a car that emitted less emissions as a diesel car but had a higher P11d value.

How do diesel cars affect company car tax?

Diesel cars are best for long journeys. So if you do a lot of motorway driving or travelling to clients further away, then you will find it more beneficial if you had a diesel car as your company car. Many executive, luxury saloons come in diesel guises and these also make really popular company cars.

Diesel cars have been considered more eco-friendly as petrol cars, and therefore more appealing in terms of company car tax. But, if you’ve seen the news recently you would have seen that this is not the case. At all. Although, they are still appealing for company car tax. However, we can reverse the above argument and apply it to diesel cars.

While your diesel car may emit less CO2, its P11d value could be more than the petrol city car. This could bump up the cost of your company car tax.

If you wanted to ensure your company car tax was the lowest it could be, then you could opt for a less expensive diesel car.

petrol vs. diesel

Ultimately, under the new company car tax rules, you will have to pay company car tax regardless of how much CO2 your car emits. So, whether you get diesel or petrol is really down to what is best for your situation.

Now we’ve discussed the petrol vs. diesel debate, which petrol cars are the best for company car tax?

Some of the cars you could be looking at are;

So there is a mix of cars there. If you want something with a more premium badge then of course you’ll be wanting to look at the Audi. But, as we mentioned earlier, these tend to be the smaller, city cars that are more efficient petrol cars.

What are the best diesel cars for company car tax?

Okay, so what about the best diesel cars?

These are also pretty mixed, and some of these do have petrol counterparts. However, if you are planning on doing long journeys, as we’ve said, you are better off looking at the diesel.

So, while diesel cars are known for being more eco-friendly and therefore are better for low company car tax, this doesn’t always have to be the case. A petrol car can have a lower P11d value, meaning that it could potentially outweigh the slightly lower emissions. However, the decision is ultimately down to you and your situation. You may be more suited to getting a petrol car or it may be more cost saving for you to go for a diesel. Hopefully, though, this has helped you make your decision.

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Holly Martin

Holly Martin

Content Co-ordinator at OSV Ltd
Holly enjoys: Reading, music and spending time with friends.

Within a week of Holly starting work at OSV she became an indispensable part of the marketing team. She's very intuitive and gets on with the whole office effortlessly.
Holly Martin

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