Is a cash car allowance taxed in Ireland?

Yes. A cash allowance is treated as regular pay and is fully subject to PAYE (up to 40%), USC (up to 8%), and PRSI (4%). At higher incomes, the marginal tax rate on a cash allowance can reach 52%.

How is a company car taxed differently from a cash allowance?

A company car creates a Benefit-in-Kind (BIK) based on the car's OMV, CO₂ emissions, and business mileage. BIK is typically taxed at your marginal rate but often on a lower taxable value than an equivalent cash allowance.

How do I compare a cash allowance vs a company car fairly?

Model both scenarios with the same salary inputs. Compare estimated net take-home, not gross values. Use our Company Car BIK tool to test different OMV, mileage, and year assumptions.

Updated 2026-01-11·10 min read

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Company Car BIK Calculator

Cash Allowance vs Company Car — Ireland 2026

A €10,000 cash allowance sounds attractive — but at a 52% marginal tax rate you keep only ~€4,800. A company car's BIK value depends on OMV, CO₂, and mileage. Use the Company Car BIK tool to compare net take-home.

Compare cash vs car →Salary calculator

Cash vs Car — Key Numbers for 2026

Cash allowance taxed at up to 52%

A €10,000 cash allowance added to salary: you lose 40% PAYE + 8% USC + 4% PRSI = ~€4,800 kept.

Company car BIK based on OMV

A €35,000 car at 30% BIK rate = €10,500 taxable benefit. Net cost at 52%: ~€5,460 — but you don't pay the car purchase cost.

Compare net outcomes, not gross values

Use the Company Car BIK tool to model both scenarios with your actual salary and car choice.

1) How cash allowances are taxed

A cash car allowance is additional salary taxed at your marginal rate: PAYE up to 40%, USC up to 8% (above €70,044), and PRSI at 4%.

Example: On €80,000 salary + €10,000 cash allowance = ~52% effective tax = ~€4,800 in pocket. Use the Salary Calculator to see your exact take-home.

2) How company car BIK works

BIK = OMV × BIK rate% (based on CO₂ + mileage). A car at OMV €35,000 with 30% BIK = €10,500 taxable benefit. At 52% rate, tax cost ~€5,460. Model your exact scenario with the BIK tool.

3) The correct comparison workflow

Calculate baseline net salary — no car, no allowance.
Model company car with BIK tool.
Add cash allowance in Salary Calculator.
Compare net take-home — higher net pay + vehicle benefit wins.

Cash allowances and BIK are treated differently by each payroll system. These estimates are for planning only. Confirm with your payroll department.

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