P11D vs mileage allowance: which is cheaper for your client?

Two questions to answer for every client who needs a car for work:company car or personal car? and, if personal, employer reimbursement at AMAP rates or actual costs?

The mileage allowance route

The employee uses their own car. The employer reimburses 45p / 25p per business mile, tax-free. No P11D, no Class 1A NIC, no employer admin beyond the expense claim.

• 10,000 miles × 45p = £4,500 tax-free
• Next 5,000 miles × 25p = £1,250 tax-free
• Total reimbursement: £5,750 with no tax cost

The company car route — petrol/diesel

Take a £35,000 list price diesel with 140g CO2/km. Using the 2026/27 BIK table, the appropriate percentage is around 35% (37% cap less the diesel modifier where applicable). Cash equivalent is £12,250.

• Higher-rate employee tax cost: 40% × £12,250 = £4,900/year
• Employer Class 1A NIC: 15% × £12,250 = £1,838/year

Plus fuel benefit if the employer pays for private fuel. Almost always cheaper to use the personal car and claim AMAP.

The EV exception

Same £35,000 list price, electric:

• BIK %: 4% for 2026/27
• Cash equivalent: £35,000 × 4% = £1,400
• Higher-rate employee tax: £560/year
• Employer Class 1A: £210/year

Now the company car is dramatically cheaper than reimbursing personal mileage at 45p — and the company can recover the cost via capital allowances. For owner-managers, an EV through the company is one of the few unambiguously good ideas of the past two years.

The shortcut

Three questions: (1) does the client want an EV? if yes, company car. (2) if it's an ICE car under 10,000 business miles, almost always personal car + AMAP. (3) above 10,000 business miles in an ICE car, run the model — the answer depends on CO2 and list price.