Should your company buy your car?
A new electric car bought by the company can be written off against its profits in one go, while company car tax on it stays low. See whether the company buying your car, or you buying it and claiming mileage, costs less overall.
Your answer
Enter the car's list price, your miles and running costs, and your salary to compare the two ways.
About this calculator
For owner-directors of a limited company deciding whether the company should buy a new car for them, or they should buy it themselves.
What happens to your answers
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How it’s worked out
If the company buys it, it gets tax relief on the price through capital allowances. A new electric car gets a 100% first-year allowance if it's bought by 31 March 2027: the whole price comes off the company's profits in one go. Other cars get 14% a year of what's left (up to 50g/km) or 6% a year (over 50g/km). You pay income tax on a share of the list price each year, and the company pays 15% National Insurance (Class 1A) on the same amount.
If you buy it, you pay for it with extra dividends or salary from the company, and pay tax on that. The company can pay you 55p a mile tax-free for the first 10,000 business miles a year (25p after), and it gets Corporation Tax relief on that.
Each total is the money that leaves you and your company together: the car less what it sells for, the running costs and all the tax, less any tax relief. When the company sells the car, relief above its tax value is taken back; that part is approximated. We use whole tax years from 2026/27 at today's tax bands, and don't count interest, VAT or the timing of payments.
Worked example
The company buying the car costs about £22,252 less over 4 years than buying it yourself.
2026/27 to 2029/30 · new electric car bought now at its list price · sold for 40% · company profits up to £50,000 (19%) · salary £12,570 · dividends £37,700 a year · paid from dividends
| A. The company buys it | |
|---|---|
| List price the company pays, less £16,000 when it's sold (40%) | £24,000 |
| Running costs, £1,500 a year for 4 years | + £6,000 |
| 2026/27: 4% of the £40,000 list price = £1,600, taxed as your pay. Your extra income tax | + £720 |
| 2027/28: 5% of the £40,000 list price = £2,000, taxed as your pay. Your extra income tax | + £900 |
| 2028/29: 7% of the £40,000 list price = £2,800, taxed as your pay. Your extra income tax | + £1,260 |
| 2029/30: 9% of the £40,000 list price = £3,600, taxed as your pay. Your extra income tax | + £1,620 |
| Dividend tax on the extra dividends you take to pay that tax | + £2,504 |
| Company's National Insurance on the benefit (Class 1A, 15%) | + £1,500 |
| Corporation Tax saved by the 100% first-year allowance on a new electric car: the whole £40,000 in 2026/27, at 19% | − £7,600 |
| Corporation Tax saved on the running costs and Class 1A, at 19% | − £1,425 |
| Allowances clawed back when it's sold (roughly): £16,000 more than its tax value of £0, at 19% | + £3,040 |
| Cost if the company buys it | £32,519 |
| B. You buy it | |
| List price you pay, less £16,000 when you sell it (40%) | £24,000 |
| Running costs, £1,500 a year for 4 years | + £6,000 |
| Dividend tax on the extra dividends you take to pay for the car | + £27,264 |
| Dividend tax saved: the mileage money left after your costs means you take less in dividends | − £403 |
| Corporation Tax saved on the mileage money the company pays you (£2,750 a year, tax-free to you), at 19% | − £2,090 |
| Cost if you buy it | £54,771 |
Worked out using HMRC's published rates for the 2026/27 tax year (6 April 2026 to 5 April 2027), on a yearly basis.
Questions people ask
Why does an electric car usually come out cheaper through the company?
Two reasons. The company can take the whole price off its profits in the year it buys a new electric car (until 31 March 2027), and company car tax on electric cars is low: 4% of the list price in 2026/27, rising to 9% by 2029/30. A petrol or diesel car is taxed on up to 37% of its list price.
What happens when the company sells the car?
The sale price comes off the pool of tax value. If it sells for more than its tax value, some of the relief is taken back. After a 100% allowance the tax value is nil, so tax is due on the whole sale price. If it sells for less than its tax value, the rest of the relief keeps coming in later years, which we don't count.
Should the company pay for fuel for my personal trips?
Usually not. Free fuel is taxed on £29,200 times the car's percentage, whatever you actually use, so it only pays if you drive a lot of personal miles. The company paying to charge an electric car is not taxed as free fuel.
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