Assuming you have calculated the eight elements of company car costs as accurately as possible, then you’ll have arrived at the true cost of running a company car.

Many companies are content to pay a cash allowance that mirrors that amount and, if your costings are correct, then there seems little to fault this approach.

All that remains is to remind drivers that while the allowance will be taxable, scale charges will not apply, making ‘tax no longer paid’ part of the driver’s disposable income.

Ideally, you should aim to ensure that neither the employer nor employee is financially worse off under a cash for car policy than with a company car scheme, but in practice this is sometimes difficult to achieve.