What are the tax implications of a car allowance?
Payment of a car allowance gives rise to a number of tax questions. An allowance paid to an employee is taxable income, and tax is required to be withheld from the payments according to the prescribed tax scales, unless it excluded. The exceptions depend on exactly what the allowance is for and how it is calculated.
What is the UK car allowance and mileage allowance for employees?
UK car allowance and mileage allowance for employees. Can I get both? In the United Kingdom, your employer may choose to provide you with a car allowance which is considered a cash benefit. Cash benefits are usually taxed, and we’ll get into that a bit further down.
Do I have to spend the full allowance on a vehicle?
You are not required to spend the full allowance on a vehicle. If you drive your private car for business, you are of course responsible for any maintenance, repairs, insurance, and MOTs of the vehicle.