BMW has announced a green version of the 3-Series saloon that falls into the lowest company car tax band for diesels.
It means a 40 per cent tax payer choosing the new 316d ES instead of a 318d ES could save more than £500 a year in benefit-in-kind tax.
The 316d uses a detuned version of BMW's 2.0-litre diesel engine. It produces 116bhp and 191 lb-ft of torque, but its 118g/km of CO2 means it falls below the 120g/km threshold that allows a five band drop in company car tax.
Drivers choosing a 318d, which has CO2 emissions of 123g/km, would be taxed at 18 per cent of the car's value, but the 316d incurs a charge at 13 per cent. Therefore, a driver liable for income tax at 40 per cent would pay £1208 a year for choosing the 316d ES, compared with £1732 a year for the 318d ES.
A 20 per cent tax payer would face a bill of £604 in the 316d ES compared with £866 for the 318d ES. Not only does the BMW offer company car drivers lower tax bills than premium rivals, it also undercuts green versions of mainstream cars such as the Ford Mondeo Econetic.
The 316d ES, on sale from September 2009, comes with air conditioning, multi-function steering wheel, a six-speed gearbox, front and rear Isofix child seat mounting points and stop-start technology.
Fuel consumption, according to BMW, is 62.8mpg on the combined cycle, while the car accelerated from 0-62mph in 10.9 seconds, and has a maximum speed of 125mph.