The definition of car allowance may be somewhat loosely defined.
You, the employee, get to choose how to use your car allowance, whether for financing a new car, for the repayments of your current car, or for the general maintenance and upkeep of your current car. A car allowance can be used to finance a new car AND contribute to the running costs of it. Or, the allowance can be used for the company car you have been given.
Your employer must itemise a car allowance on your pay slip. This makes it easy for a tax accountant to work out what can be deducted from tax, or the different ways that you can benefit from your allowance.
A car allowance, while completely genuine, benefits both the employer and the employee.
Note that a company car, while different to a car allowance, will likely come with a car allowance. The employee gets to benefit from both, as does the employer, but again, get in touch with us to work out the best possible way of doing this.
Car allowances generally allow the user good tax benefits. If your employer is giving you an allowance, whether for your own car, for a company car or a new car, you can claim back. This is why it is so important that you choose to use your car allowance carefully and legally.