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Should I take a company car or a cash alternative? 

A reader is wondering if he'll be better off opting out of his company car scheme and buying his own car to use for work...

Audi A4 Avant front three quarters

I’d appreciate your advice on a quandary I have at the moment - should I take a company car or opt out and take a cash allowance instead? 

Many colleagues have urged me to do the latter as the financial implications of making money back on fuel and not having to pay ever-increasing company car tax are compelling motives. After tax, I would get around £400 from my employer towards the cost of running my own car, and I’d be able to claim 45p per mile. However, I’ve had a company car for many years and I appreciate there are clearly benefits to this, too. 

One car I’ve been considering is the Audi A4 Avant. Until last month the 40 TDI had a company car tax cost of £490 based on CO2 emissions of 156g/km. However, this has gone down to £410 with CO2 at 141g/km. Is this correct?

Michael Barling

What Car? says…

The decision on whether to opt for cash instead of taking a company car depends on quite a number of factors. You'll need to consider the amount of money you’ll receive, whether you already have use of a car or would need to buy or lease one, and how keen you are to pay for servicing and maintenance or if you’re happier for these costs be covered by your company. With a company car you also don’t have to worry about paying for insurance or breakdown cover and you’ll get a new car at regular intervals. 

However, having looked at the amount you will get from your employer and the mileage fee, it looks like you may be better off taking the cash alternative. Other benefits of buying a car outright include the facts that you'll be able to choose from a wider range of cars than your employer might offer, and that you’ll be investing in an asset that you'll be able to sell in the future.

With regard to the CO2 emissions of the A4 Avant 40 TDI, they have indeed dropped to 141g/km for the 2021 model year.

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