How much tax will I pay on my car allowance?

Question

I have been offered a salary of £34,000 plus a company car or car allowance of £4980. I have my own car so will probably take the car allowance but would like to know how much of the car allowance I will actually 'take home'. Thanks

Answer 1

The basic rate band is £34k of taxed income, so you could say your car allowance is covered by your tax free allowance, effectively making it taxable at 20%.

Don't forget that you can reclaim 40p pm for the first 10,000 business miles and 25p pm thereafter against tax.