Company Car vs Car Allowance Calculator
Compare the financial implications of taking a company car versus a cash car allowance.
Understanding Your Options
This calculator helps you compare the net financial impact of choosing a company car versus taking a car allowance.
Company Car
- You pay Income Tax on the Benefit-in-Kind (BIK) value of the car.
- The BIK value depends on the car's P11D price, CO2 emissions, fuel type, and electric range (for PHEVs).
- Your National Insurance contributions are based on your cash salary (not affected by the car BIK).
- Any cash contribution you make towards the car's private use can reduce the taxable BIK value.
Car Allowance
- The allowance is added to your gross salary and is subject to Income Tax and National Insurance.
- You receive the net allowance after these deductions.
- You are responsible for all costs of running your private car (fuel, insurance, VED, maintenance, depreciation) from this net allowance and potentially other funds.
This tool provides an estimate for illustrative purposes. Tax rules are complex and subject to change. Consider all factors, including car suitability, mileage, and insurance, and consult a financial advisor for personalized advice.
Frequently Asked Questions
- What is the Company Car vs Car Allowance Calculator?
- The Company Car vs Car Allowance Calculator is a free UK-based tool designed to help employees compare the financial impact of receiving a company car versus taking a cash car allowance. It helps you understand which option gives you better value after taxes and other deductions.
- How do I use the Company Car vs Car Allowance Calculator?
- To use the calculator, enter details such as your annual salary, the car allowance amount, the value and CO₂ emissions of the company car, and any expected personal car costs. The tool will compare your take-home pay under both scenarios and show a side-by-side breakdown.
- What costs does the calculator take into account?
- The calculator considers Benefit-in-Kind (BiK) tax on the company car, income tax and National Insurance on the car allowance, and optional inputs like personal insurance, maintenance, and fuel. This provides a more complete comparison of your actual out-of-pocket cost.
- Who should use this calculator?
- The calculator is ideal for UK employees offered the choice between a company car and a cash allowance. It’s useful for anyone who wants to make an informed decision based on their personal tax situation and estimated running costs.
- Does the calculator use current UK tax rules?
- Yes, it uses up-to-date UK tax rates including Income Tax bands, National Insurance thresholds, and Benefit-in-Kind (BiK) rates. These are updated regularly to ensure accurate comparisons based on the latest legislation.
- What should I consider beyond the calculator results?
- While the calculator gives a financial comparison, you should also think about practical aspects such as car reliability, mileage limits, job requirements, and long-term costs. Speak to a financial adviser or HR representative for personalised guidance.
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