The simple answer (and why it's incomplete)
Cashback is worth exactly what it says: 1% back means £1 for every £100 spent. No ambiguity, no effort, no thinking.
Points are worth whatever you make of them. Redeem Amex Membership Rewards through their online shop and you'll get ~0.5p per point — worse than cashback. Transfer to British Airways and book an off-peak flight, and those same points are worth 1.5-2p each — double or triple the cashback equivalent.
The real question isn't "which is better?" It's "will you actually use points optimally?"
The maths at £5,000/month spend
Let's compare the two main free business cards and the leading points card:
| Card | Annual rewards (raw) | Annual fee | Net value | |------|---------------------|------------|-----------| | Capital on Tap | 60,000 points (~£600) | £0 | ~£600 | | Funding Circle | £600 cashback | £0 | £600 | | Amex Gold Business | 60,000 MR points | £195 | Depends on redemption |
The Amex Gold's 60,000 MR points are worth:
- £300 if redeemed as statement credit (0.5p/point) — worse than cashback
- £600 if transferred to Avios for short-haul flights (~1p/point) — matches cashback
- £900-1,200 if transferred to Avios for business class or to Virgin Atlantic (~1.5-2p/point) — significantly beats cashback
After the £195 fee:
- Worst case: £105 net (worse than cashback)
- Mid case: £405 net (worse than cashback)
- Best case: £705-1,005 net (beats cashback by £100-400)
Points only win if you transfer them to airline partners and book flights you'd actually pay for.
When cashback wins
You don't fly. If you're not booking flights, airline miles are worthless to you. 1% cashback beats 1% in points you'll never use optimally.
You value certainty. Cashback is deposited in your account. No decisions, no transfers, no partner availability issues. The value is guaranteed.
You'd carry a balance. If there's any chance you'd carry a balance (paying interest), cashback on a no-fee card is the only sensible option. Don't pay £195/year for an Amex Gold and then pay 25% APR on the balance.
Your spend is under £3,000/month. At lower spend levels, the Amex Gold's £195 fee eats too much of the rewards. The break-even point where Amex Gold beats a free cashback card is around £3,000/month — and that's only if you transfer points to airlines.
You want to reduce costs, not earn perks. Cashback directly reduces your business expenses. Points give you travel perks. If your priority is lowering costs, take the cash.
When points win
You fly for business. If you're already spending money on flights, transferring points to airlines gives you those flights for free (or in a better cabin). The value is real and often substantial.
You spend £5k+/month. At higher spend levels, the £195 Amex fee becomes a rounding error. The superior transfer partner value pulls ahead of cashback.
You enjoy travel hacking. Some business owners genuinely enjoy optimising point transfers and finding sweet-spot redemptions. If that's you, the value ceiling on points is much higher than cashback.
You have a specific travel goal. "I want to fly business class to Tokyo" is a clear goal that points can achieve and cashback can't (not efficiently, anyway). 100,000 MR points transferred to Virgin Atlantic gets you there. £1,000 in cashback doesn't.
The hybrid approach
You don't have to choose one or the other. Many businesses use both:
- Amex Gold Business for spend where Amex is accepted — earn MR points for travel
- Capital on Tap or Funding Circle for spend where Amex isn't accepted — earn cashback/points
This gives you the best of both worlds: flexible airline points on the bulk of your spend, and guaranteed cashback on the rest. No annual fee on the backup card, and the Amex fee is justified by the higher spend routed through it.
Points devaluation: the hidden risk
Airline loyalty programmes devalue their points over time. BA has increased Avios prices on several routes in recent years. What costs 13,000 Avios today might cost 15,000 next year.
Cashback doesn't devalue. £1 is always £1.
This is a real risk for points hoarders. If you're sitting on 200,000 MR points "for the right trip," those points are losing value every year you wait. Either transfer and book, or take the cashback instead.
See our guide to maximising Amex transfers for the best current redemption values.
The honest answer
For most UK small businesses — especially those under £5k/month spend — cashback is the better choice. It's simpler, guaranteed, and the value difference is marginal.
For businesses spending £5k+/month with owners who travel: points win, but only if you actually transfer them to airline partners. Points sitting unused in your Amex account are worth less than cashback sitting in your bank account.
The worst outcome: paying £195/year for an Amex Gold and then redeeming points through the Amex shop at 0.5p each. That's paying a premium for a worse deal than a free cashback card.
Know yourself. If you'll optimise your points, go for it. If you won't, take the cash.