I've just got a new job. Part of the deal is a car allowence or a company car.

I'm planning on taking the money (I've recently bought a new car so I'm not really that interested in a company car). It's been sold to me as basically topping up my wage. The basic salary without this is lower than my current salary.

But I'm wondering is there any tax (or other monetary) advantage to taking an actual car over receiving the money?

  • Any sane accountant will tell you buy the car with personal money and claim mileage. The hassle of buying a car for personal use on company's account isn't worth it.
    – DumbCoder
    Apr 17, 2015 at 9:34

2 Answers 2


For tax year 2015-2016 onwards, HMRC have a company car tax calculator, so you can calculate how much tax you would have to pay if you took the car:

Company Car and Car Fuel Benefit Calculator

If you take the money instead, of course it is taxed just as your normal income - so if you are a higher rate tax payer that is 40%.

A: Take the car
Calculate: how much you can sell your own car for, how much you save on tax / insurance / fuel (depending on exactly what package they are offering you, i.e. are they paying for these things or not), and deduct the tax payment the HMRC calculator gives you. (Of course on an ongoing basis you can't include the sale price of your own car in these calculations as that is a one-off benefit).

B: Take the money
Calculate: how much your take home pay will increase by (60% of the car allowance payment if you are a higher rate tax payer.

You should be able to do a comparison between the two figures obtained this way and see which is better for you. It depends on all sorts of factors including how much you use your car for private use, how long your commute is, etc.


It depends on the deal being offered.

A company car comes with insurance and maintainance paid for which is a not insignificant benefit on anything other than an eco-box (think about MOT, servicing, tyres, brakes etc).

Also they may include a fuel card, which is the best part in my opinion. Although you would be charged a higher level of benefit-in-kind tax you wouldn't pay for any fuel personally. This may be a big benefit depending on your commute and your personal miles. There's a handy calculator here, to see if it works in your situation have a play with the numbers.

You must log in to answer this question.