3.The tax you can reclaim for using your own car for business use:

Since by taking the cash option, you would be using your own car for business you are entitled to reclaim tax for that business use.

Approved Mileage Allowance Payments (AMAP)

The authorised mileage rates were designed to allow employers to pay employees a set amount per mile without the employee incurring NI or income tax liabilities. If your employer pays you a pence per mile then these scales reflect the maximum you can be paid without incurring tax.

By the same means if your employer does not pay you any pence per mile for using your own car then you can reclaim income tax relief according to the mileage rates in the scale. Don't be concerned about any other monthly sum they give you since you will have had to pay tax on this already.

eg. If your employer pays you nothing per mile and you are a 40% tax payer doing 8000 business miles in you own car you can reclaim £1280 cash back from the taxman.(8000m x 0.40 = £3200 x 40%=£1280)