COMPANY cars are still viewed as essential by more than eight out of ten companies - but the number offering the cash for car alternative is continuing to increase according to a new survey by the Reward Group. Its wide-ranging survey of Employee Benefits and Employment Trends identifies a growing trend towards cash for car and more flexibility in whether drivers can up- or downgrade their vehicles.

The survey calculated that the value of a typical company car to an employee paying 25% income tax - including factors such as insurance, road tax and depreciation - amounts to £3,078 a year for a Vauxhall Vectra 1.6LS. The figure rises to £3,713 a year if the company also provides petrol for private mileage.

The advantages are not as great for a 40% taxpayer, who only benefits to the tune of £2,529 (£2,993 with petrol) a year from the same car. The report notes that directors and other senior managers are much more likely than junior employees to get petrol for private use. While 64% of directors get free petrol, only 32% of middle management and 18% of junior management have the benefit.

Almost a quarter of respondents said they had changed their policies to offer salary in lieu of a company car - although it is more likely to be offered to senior employees - and a further 9% said they were actively considering such a change. The report calculates that junior staff are offered up to £5,722 a year in lieu of a 1.6-litre car, middle management can expect up to £6,364 for a 1.8-litre car and directors up to £8,890 for a 2.3-litre model.