Summary
If you win a car competition, you'll almost always be offered cash instead of the car. Good news — but it's usually not the full value. Most operators pay somewhere between 60% and 80% of what the car's advertised at, and the figure is buried in the terms.
This page explains why that gap exists (short version: the operator can buy the car for less than list price, and the difference is their margin), and flags the one clause that really catches people out — some sites pay a much smaller cash sum if the competition doesn't sell out.
There's a simple rule of thumb for the car-or-cash decision: check what the same car sells for privately on Auto Trader. If the cash alternative is close to that, take the money and skip the insurance headache. If it's well under, take the car.
And no, you won't pay tax on it either way.
Almost every UK car competition offers a cash alternative — a lump sum you can take instead of the car if you win. It's one of the most searched-for lines in any set of terms and conditions, and one of the least understood. The figure is rarely the full value of the car, the way it's calculated varies a lot between operators, and on some sites it's the only thing you'll get if the competition doesn't sell out. This guide explains what a cash alternative is, how operators set the amount, when you'd be better off taking the money over the keys, and the small print that catches winners out. We don't run competitions ourselves — we compare and review the sites that do — so we've written this from the entrant's side of the table.
What a cash alternative actually is
When an operator lists a car as a prize, the terms will usually say something like "cash alternative: £45,000" or "the winner may elect to receive a cash prize in lieu of the vehicle." That's the cash alternative: a fixed sum you can choose instead of taking delivery of the car.
It exists for practical reasons on both sides. For the winner, a £150,000 supercar comes with insurance that could run to several thousand pounds a year, servicing bills to match, and the small matter of where to keep it. Plenty of people who win a dream car would rather have the money. For the operator, offering cash avoids the cost and hassle of sourcing, delivering and transferring a specific vehicle — and in some cases they never actually buy the car until someone chooses it.
How much is it, and why isn't it the full value?
This is the bit that surprises most first-time entrants. The cash alternative is almost never the headline value of the car.
From the operators we track, the typical range is somewhere between 60% and 80% of the listed car value, though it can sit outside that in both directions. A used hot hatch listed at £25,000 might carry a £18,000 cash alternative. A new Range Rover at £90,000 might come with £70,000 in cash.
There are a few reasons the number is lower:
The listed value is often the retail price, and the operator can usually source the car for less — through trade, dealer partners, or by buying used.
The car might not exist yet. Some operators only purchase the vehicle once a winner confirms they want it. The cash figure reflects what they'd actually spend, not the RRP.
It's a business. The gap between the car's advertised value and the cash alternative is part of the operator's margin. That's not necessarily a red flag — it's how the model works — but it's worth understanding when you're comparing sites.
A small number of operators offer a cash alternative at or near 100% of the car's value, and a few offer none at all. Both are worth noting in the listing.
Cash alternative versus cash prize
These get confused, and the difference matters.
A cash alternative is offered to the winner of a car as an option instead of the vehicle. You win the draw, then you choose.
A cash prize is a competition where the prize is cash — there's no car. Some sites run both types, and some list the same amount of money under both labels.
There's a third variant to watch for: the partial-sale cash substitute. On some sites, if a competition doesn't sell all its tickets by the closing date, the operator draws anyway but replaces the car with a cash amount based on how many tickets were sold — often a percentage of ticket revenue rather than the advertised cash alternative. That figure can be far lower than either the car's value or the stated cash alternative, and it's only ever in the T&Cs. If you see "prize may be substituted" or "cash prize equal to X% of ticket sales" in the terms, that's what it means.
Should you take the car or the cash?
There's no single right answer, but there is a fairly reliable way to think about it.
Take the cash if:
The alternative is close to what you could sell the car for privately. A quick check on Auto Trader for the same model, age and mileage tells you the private-sale ceiling — and remember you'd pay to insure, tax and advertise it in the meantime.
Running costs would be a genuine burden. Supercar insurance for a younger driver, or anyone without a garage, can be prohibitive.
You'd sell it anyway. Winners who take a supercar and list it the following week often end up with less than the cash alternative once you factor in the dealer's margin or the time it takes to find a buyer.
Take the car if:
The cash alternative is unusually low relative to the car's real-world value — under 60% or so — and you're confident you could sell it for more.
It's a car you'd actually keep. Winning a £30,000 family car you'd otherwise have financed is a very good outcome.
The operator sources a specific, well-specced example you've seen (some show the actual car on the listing rather than a stock photo).
One practical note: most operators give you a short window to decide, usually within a few days of the draw. Have a rough idea of what you'd do before you enter, not after your name comes up.
Is the cash alternative taxed?
No. In the UK, prize winnings — whether the car or the cash in place of it — aren't treated as income by HMRC, so there's nothing to declare and nothing to pay. If you take the car, you'll pay road tax and insurance as normal once it's registered to you. If you take the cash and it sits in a savings account, any interest it earns is taxable in the usual way, but the lump sum itself isn't.
How to check the cash alternative before you enter
It's always in the T&Cs, and on better-run sites it's on the competition page itself, next to the prize. Things to look for:
A specific figure, not "a cash alternative may be available." Vague wording means the operator decides after the draw.
The full-sale and part-sale figures, if the competition isn't a guaranteed draw. These can be very different numbers.
Whether the alternative is mandatory. A small number of competitions are cash-only from the winner's point of view — the car is illustrative and the prize is always the cash figure. That's not necessarily bad, but it should be clear.
How and when it's paid. Bank transfer within a stated number of days is standard. Anything vaguer is worth a question to the operator before you buy tickets.
We record the cash alternative for every listing we cover, and our operator reviews flag any site where the figure is missing, unusually low, or only appears in the small print.
Frequently asked questions
How much is the cash alternative usually? Most UK operators set it at roughly 60% to 80% of the car's advertised value. It varies by site and by competition, so check the specific listing rather than assuming.
Why is the cash alternative less than the car's value? Because the operator can usually source the car for less than the retail price, and because the difference is part of their margin. The advertised value is often the new or "list" price rather than what the operator actually pays.
Can I choose the cash alternative after I've won? On almost all sites, yes — that's the point of it. You'll typically be asked to decide within a few days of the draw. Check the terms for the deadline.
Is the cash alternative taxable in the UK? No. Prize winnings aren't income, so the cash isn't taxed. Interest earned on it afterwards is.
What happens to the cash alternative if the competition doesn't sell out? It depends on the operator. Guaranteed draws pay the stated prize or cash alternative regardless. Non-guaranteed draws may extend the closing date, or substitute a cash amount based on ticket sales — which can be much lower. Read the "prize substitution" clause before entering.
Do all car competitions offer a cash alternative? Most do, but not all. A few operators only offer the vehicle. Some offer cash at close to 100% of the value. It's always stated in the terms.
Can I negotiate the cash alternative? Generally not. The figure is fixed in the T&Cs at the time you enter. Some operators will discuss alternatives — a different car, for example — but there's no obligation to.
Is it better to take the cash or the car? If the cash alternative is close to what you'd get selling the car privately, and you don't want the running costs, cash is usually the cleaner outcome. If the alternative is unusually low and it's a car you'd keep or could sell well, take the car.