If you work for a company and get to use a company car for your own use (including travelling too and from work), the government will see this as a benefit to you and therefore should be liable to some tax. Even if you are a company owner where the business pays for the car, either as a leased vehicle or bought outright, in theory this will be deemed as a company car and you as an an employee liable for the benefits it gives you.
The actual figure the tax is based on is called benefit in Kind and this is calculated using a BIK scales of 10% upwards and then multiplied by the retail value of the car. The BIK scale is calculated using the official CO2 figures of that car. In better words, the lower the emissions of the car, the lower the scale and cheaper your tax commitment will be. However, even though diesel cars tend to be lower in emissions these days, there is a 3% surcharge on these vehicles, meaning 13% is the cheapest level you can be at with a diesel car.
This figure is then multiplied by the retail value of the car (not the actual value you paid).
So if your car falls in the 13% band and the retail price of that car is £20,000, then your benefit in kind will be 13% of £20,000 =£2600
The amount you actually pay depends on your tax level, either 20% or 40%.
If you are on 20% tax, then the amount of tax for that year will be £480
If you are on 40% tax then it will double that.
as we said before these rules apply even with UK car lease or contract hire.
To find out more visit the government site on company cars.