Company Car Allowance For Leasing

Been offered a company car? You should understand what company car allowance is and why it is important to you when leasing a company car so check out this guide. 

If you’ve been offered a company car allowance, you may be wondering what exactly that means and if you can use it to lease your next car. This guide covers what a company car allowance is, why it benefits you, whether can you lease with an allowance, what responsibilities you have and what disadvantages are there to a company car allowance.

What is Company Car Allowance?

Company car allowance is a benefit that employers may offer their employees during their time at their company. More businesses have started offering either a company car or a company car allowance and have been leaving the choice to the employee on which one they prefer.

To put it simply, a company car allowance is when your employer adds a particular amount of money to your monthly salary to pay for a car whether it be PCP or PCH. The amount offered is determined by the company itself; usually, the payments include the monthly price you pay for a car plus any additional to cover maintenance, servicing, repairs, MOT etc.

Company car allowance gives you more freedom of choice for your vehicle and how you want to spend it. Some employers will impose restrictions on what car you choose to have. These restrictions can be about the car’s age, safety rating, style and fuel type.

Can I Lease a Car Using My Company Car Allowance?

Receiving a company car allowance offers you a lot of freedom with what car you can get. It also means that you have the freedom to choose how you pay for the car; whether you buy a new one, lease it, contract purchase (PCP) it or whether it just goes to the upkeep of your current vehicle.

If you decide to lease a new vehicle with your company car allowance, the contract will still need to go into your name, and you would need to pass a credit check. This does mean that if you ever leave the business, the car will still remain in your name, and you wouldn’t have to return it to the company.

What Am I Responsible for With Company Car Allowance?

As the company car allowance is in your name (as it has been added to your salary), you are responsible for organising, paying for and looking after the car. If you decide to lease with Willow Leasing, we will set up the contract for you, making the whole process hassle-free and simple. If you didn’t want to worry about the general upkeep of the vehicle, you could also take out a maintenance contract with us as well.

Benefits Of Company Car Allowance:

  • You can choose how to spend the money: buy it, lease it or fund a current car.
  • You can choose what car to drive (rather than being given a company car from a number already available)
  • If you leave the company, the car would remain in your hands (as long as you can still pay for it)
  • You don’t have to worry about company car tax as this does not apply to a company car allowance. (As your wage will increase, you will have to more tax on your salary though)

Disadvantages of Company Car Allowance:

  • You will have to pay your personal income tax rate on the additional salary.
  • Your choice of car may be restricted by your employer’s car policy.
  • If you leave the business, the car payments will still continue to come out of your account – you will need to make sure you can pay for the car without the additional support from the allowance.

Any Questions?

If you have any more questions about the company car allowance that hasn’t been covered in this guide you can get in contact with our team on 0345 350 3776, email us at or send us a message on our live chat system.

Want to get started on choosing your car? We’ve got all of our personal car lease deals and even some no-deposit car lease options available. Check it out today!