Company car or car allowance?

A handy guide comparing your options

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Being offered a company car was considered a great incentive and perk, but in some cases you may find that your employer gives you the option of a car allowance. If you find yourself presented with the two options, our handy guide with give you all the information you need to make an informed decision.

Choosing a company car

Whether you’re starting a new job or received a promotion, you may find your new position comes with a company car, but what are the advantages of taking a company car:

  • The company cover the insurance
  • The company cover the vehicle tax
  • For the most part, any repair work will be covered
  • Depreciation is not a concern
  • Have the ability to drive a new car a year or two

The disadvantages of the company car scheme would be that you do not own the vehicle and depending on the vehicle you choose you could pay quite a bit of tax, but you can always speak to one of our leasing advisors for advice on company car tax.

Opting for car allowance

Car allowance works through receiving a car cash allowance, meaning you drive your own vehicle and receive a mileage based incentive from your employer, known as an Inland Revenue Authorised Mileage Rate (IRAMR).

The advantage of this option is that this allowance is tax free – The disadvantages though are that you have to drive your own vehicle (no new car!) you have to still cover costs such as car insurance, vehicle tax and any repairs and maintenance , and you’re adding mileage to your own vehicle.

When it comes to choosing it’s all about personal choice and what is important to you. Weight up the pros and cons and you’ll find making that decision a lot easier, and if you need any advice our team of leasing experts are always on hand.