What is a car allowance and how does it work?
A car allowance is commonly provided to an employee as an alternative to a company car scheme. The amount paid out for your car allowance is stated in the employment contract and is normally paid every month with your salary, although some employers choose to pay annually.
Can my employer pay for my car allowance if I lease?
Regardless of the car you drive - as long as it’s not a company car - your employer can choose to pay a car allowance as a company benefit. It does not matter whether you buy, already own or lease the vehicle, the allowance is the same.
How does a mobile worker get a car allowance?
The mobile worker then gets a car allowance in the amount of the mileage multiplied by the millage rate. Such amount is tax-free if it does not exceed the IRS business rate, which is $0.585/mile for 2022. The amount also should not be higher than the actual cost of driving for business purposes .