Company Car vs Cash Allowance Calculator
Should you take the company car or the cash allowance? Enter both options below to compare the after-tax cost of each and see which leaves more money in your pocket.
Frequently asked questions
Is a cash car allowance taxed?
Yes. A cash car allowance is treated as earnings and taxed at your marginal income tax rate plus National Insurance. A basic-rate taxpayer keeps about 68p of every £1 of allowance after income tax and NI. A higher-rate taxpayer keeps about 58p.
When is a company car better than a cash allowance?
A company car is usually better when the BIK rate is low, which means low-emission vehicles. Electric company cars at 2% BIK are almost always cheaper than taking the cash. For high-emission cars (BIK 25%+), the cash allowance often wins, especially for basic-rate taxpayers.
Does this include fuel costs?
No. This calculator compares the tax cost of each option only. With a company car your employer may also provide a fuel card. With a cash allowance you fund your own car and fuel. Consider total cost of ownership — insurance, depreciation, maintenance, and fuel — when comparing.
Can I switch between company car and cash allowance?
Most employers allow you to switch at the end of your lease term or at specific review points (usually annually). Check your employer's company car policy for the exact rules on switching between the two options.
Does NI apply to a cash allowance too?
Yes. Employee NI at 8% (or 2% above £50,270) is deducted from cash allowances. This calculator shows the income tax impact. Your actual take-home will be slightly less after NI. A company car BIK does not attract employee NI, only income tax.
These calculations are estimates based on 2026/27 HMRC and DVLA rates. Speak to a lender or qualified financial adviser for a personalised quote.