From April 2002 a reform in company car taxation will be introduced. For all company cars registered as of the 1st January 1998 onwards the Benefit in Kind or BIK charge will be now be calculated based upon a percentage of the car's list price versus the amount co2 emissions produced by the vehicle. This reform encourages the use of smaller more efficient engines and vehicles with a lower p11d value.

As diesel vehicles have significantly lower co2 outputs you don't have to suffer to keep your company car tax bill under control. Driving a diesel can make a big difference, although picking a smaller petrol-engine car may save you even more. Cars with automatic gearboxes often emit more co2 emissions than those with manual transmissions, so choosing to shift the gears yourself can also make a worthwhile difference.

To find out which category your current or new vehicle will fall into please click here for our taxation rate table.

Here are two examples of how the BIK will now be calculated and how it might affect you.

A BMW 520i se currently has a list price of £24880 and co2 emissions of 213 at (24%). This figure generates a BIK of £5928, which means an annual Tax bill of £2371 if you pay tax at the higher rate.

An Audi A6 1.9tdi currently has list price of £23150 and co2 emissions of 154 at 18%. This figure generates a BIK of £4167, which means an annual Tax bill of £1656 if you pay tax at the higher rate.