• Car Charge - the amount that is added to your income to determine your tax liability.
• Fuel Charge - only charged if the company pays for your private milage.

Many people who are less concerned about their image than the money in their pay packet will find that taking a cash alternative (if offered) is quite attractive. This calculator explores what happens if you take the money and, after the cost of your own car, invest the rest in an ISA or Pension.

This calculator is only designed to help you realise that it is important to recognise that you need to consider the implications of all options, and, if your savings are low, and pension provision poor, that the bright new company car may not be the wisest choice.

The figures for the Car Costs are considered accurate, but when it comes to the Alternatives, these involve simplifications and should be treated purely as indicative of the options, rather than a correct figure. Eg the Pension Projection figure, if £10000, may really lie between £8000 and £14000. If however this calculator made you aware that there are these potential thousands, it has done its job.

We can do a proper personal analysis for you if you want one.

1. List Price plus accessories. Exclude accessories designed to help disabled people, and exclude that part of the cost accounted for by allowing it to run on road fuel gas. Maximum value of list price is £80000, (if you buying a car with a higher price, only enter £80000). Classic cars (over 15 years old and with a market value in excess of £15000) are valued at market value.
2. Only the first £5000 paid by the employee helps to reduce their tax liability.
3. Tax is reduced if the car is 4 or more years old at the end of the year of assessment.
4. Other relates to cars that have no cylinder capacity and run on fuels other than electricity.
5. Car and Fuel benefits will depend upon the CO2 emissions of the vehicle. All new cars will have an official figure. Try http://www.vcacarfueldata.org.uk - select option VED (for Vehicle Emissions Data). The figure to enter is the official one, rounded down to the nearest 5. Where figures are not known leave the entry at 0 and engine size will be used.
6. Tax is reduced if the car is unavailable for part of the year. Normally only important when cars are aquired or disposed of part way through a year.
7. What is the cash alternative offered by your employer? It may or may not be the same as the car/fuel tax charge.
8. Assuming that you would buy your own car (and the company would simply cover your business petrol costs) you need to enter here your estimate of insurance and servicing costs, plus your estimate of the annual depreciation. EG £4500 car, assumed written off over 3 years, £1500 depreciation plus £500 insurance and £300 servicing, ie total £2300.
9. The "profit" ie the difference between what the cash alternative is worth (after tax), and what it costs you to run your own car.
10. Based on investing just this years single premium, ignoring any future investments of any future years profit.
11. The pension investment is greater because it does not have tax taken off.
12. ISA charges are based on an ISA from Legal and General. In practice the ISA you use may have higher or lower charges.
13. Pension assumes Stakeholder using 1% annual management charge. Any actual pension investment may be subject to higher or lower charges.