Company cars are making a comeback. In the 2022/23 tax year, 760,000 employees enjoyed the benefit, a notable increase of 40,000 employees from the year before. 

But what is the best company car? From performance to tax implications, there are plenty of cracking options, each with its own claim to the throne.

Sam Sheehan, motoring editor at cinch, the UK's leading online used car retailer, highlights the best electric, hybrid, and petrol or diesel options. 

Electric Cars
In the 2022/23 tax year, 20% of company cars, or 220,000 vehicles, were fully electric. A significant jump from the previous year's figure of 125,000.

According to Sheehan: “Not only are electric cars better for the environment, they’re also better for a business’s bottom line. 

“The full cost of an electric company car can be deducted from the company's taxable profits thanks to the 100% first-year capital allowance, including equipment for electric car charging points, and they’re cheaper to run.”

Employees will also be pleased, as they can get a new electric car and benefit from a 2% benefit in kind (BIK) tax rate – much lower than that of petrol or diesel cars. 

Tesla Model 3
The Tesla Model 3 is one of the best-selling electric cars in the UK and is a top choice for company cars. It’s lightning-fast, has a 390-mile range, a tech-savvy interior – plus, it looks great, so it ticks the boxes for a great company car. 

Sheehan says: "The Tesla Model 3 isn’t just about impressive range and performance – it’s also a smart financial choice thanks to the tax incentives of electric company cars. 

“And let’s not forget, it’s one of the most efficient electric cars. A 390-mile range and the ability to add 175 miles in just 15 minutes at a Tesla Supercharger makes it an attractive option.”

Volvo EX30
The Volvo EX30 is an excellent choice for employees, thanks to its competitive price and impressive array of tech and safety features.

“With a range of nearly 300 miles with the extended battery, the EX30 is perfect for everything from daily commutes to business trips and longer journeys,” Sheehan says.

The EX30’s zero emissions and 2% BIK tax rate make it an excellent option for those looking to make the most of the tax benefits of a company car.

Sheehan adds: “The EX30 truly delivers on all fronts for a modern company car. It offers great running costs, attractive tax benefits, superior comfort and advanced tech features. Plus, it comes with Volvo's renowned safety standards, which is key for any company vehicle.”

Hybrid Cars
For those that cover a few more miles, hybrid and plug-in hybrid company cars could be a good way to go. With lower emissions and tax benefits versus traditional petrol or diesel cars, you can get the best of both worlds.

Businesses buying hybrid company cars write off 18% of the purchase price against taxable profits if CO2 emissions are less than 50g/km – a decent increase over the 6% for cars that produce more emissions. Hybrids also have lower BIK tax rates than petrol or diesel cars, which is attractive for employees. 

BMW 530e
For a high-end company car with a green twist, the plug-in hybrid BMW 530e is an excellent option. It delivers the classic luxury of the 5 Series, enhanced with electric efficiency, combining a 2.0-litre petrol engine with a 95hp electric motor and up to 37 miles of electric-only range.

Sheehan comments: “The BMW 530e is a smart pick for executives who want both performance and efficiency. With low company-car tax due to reduced emissions, it’s a cost-effective way to drive in style. Plus, buying a used BMW can deliver significant savings while still offering top-notch luxury and advanced features.”

Cupra Formentor e-Hybrid
The Cupra Formentor is a standout with its sporty looks, strong performance and reduced emissions for the e-Hybrid version. As a distinctive Spanish brand spun off from SEAT, this medium-sized crossover delivers a unique driving experience paired with Volkswagen Group engineering. 

"The Cupra Formentor is perfect for those who want to stand out with a high-performance hybrid. Its CO2 emissions are low at 27g/km, and with a BIK tax rate of 12%, it’s a cracking choice for a company car,” Sheehan says.

Traditional fuel cars
If you want a ‘traditional fuel’ company car, you can still get decent BIK rates for petrol and diesel cars. 

The key is efficiency and low emissions. These tend to be diesels, but you can find some good petrols that fit the bill. 

Skoda Octavia
While electric vehicles offer unbeatable financial benefits, petrol cars such as the Skoda Octavia still have their place – especially if home charging isn’t an option or if you're clocking up high mileage.

With a moderate BiK rate of 29%, strong fuel efficiency of up to 54.3 mpg, and relatively low CO2 emissions starting from 118 g/km, the Skoda Octavia offers good value in terms of running costs and environmental impact.

Sheehan comments: “The Octavia is a spacious, saloon-shaped hatchback with plenty of room for passengers and luggage. The petrol engine offers a good balance of efficiency and performance, and it comes well-equipped with Skoda’s clever touches such built-in umbrellas and ice scrapers.”

Ford Focus 1.5 EcoBlue
If you're looking for a great diesel company car, the Ford Focus 1.5 EcoBlue is a standout choice. With a fuel consumption of up to 64.2 mpg, the Focus 1.5 EcoBlue helps keep running costs low. 

In addition to its fuel efficiency, the Focus 1.5 EcoBlue features CO2 emissions of 110 g/km and a BIK rate of 27%, making it a strong choice for a company car.

Sheehan says: “The Ford Focus 1.5 EcoBlue offers excellent value for money. Given the brand’s reputation for durability, a used Focus is a smart investment for both individuals and businesses looking for a dependable car that won't break the bank.”

To get the biggest tax benefit for a company car, choosing one with the lowest emissions is key. Electric company cars have a 2% BIK rate and allow 100% of the cost to be deducted from taxable profits, making them a clear winner for employers and employees. 

However, if an electric car isn’t suitable, a plug-in hybrid (or even a petrol or diesel if you choose wisely) can keep running costs low and offer improved fuel efficiency, making them compelling choices.