Answers · UK 2025/26
What is the fuel benefit charge for company cars in 2026/27 in the UK?
If your employer pays for private fuel in your company car, a separate fuel benefit charge applies. For 2026/27, the fuel benefit multiplier is £27,800. This is multiplied by your car's CO2 BIK percentage to give the taxable fuel benefit on top of the car benefit.
Full answer
The fuel benefit charge is an additional taxable benefit that applies if your employer meets the cost of fuel used for private journeys in a company car. How it is calculated: 1. Take the fuel benefit multiplier for 2026/27: £27,800. 2. Multiply by your car's CO2 percentage (the same percentage used for the car BIK). 3. The result is your additional taxable benefit from the fuel. 4. Apply your marginal income tax rate to find your tax cost. Example: - Car CO2 percentage: 25% - Fuel benefit: £27,800 x 25% = £6,950 taxable benefit - Basic rate taxpayer tax cost: £6,950 x 20% = £1,390/year - Higher rate taxpayer tax cost: £6,950 x 40% = £2,780/year Why employer-provided fuel is usually not worthwhile: The fuel benefit charge is very high relative to the actual cost of private fuel for most drivers. Unless you drive a very high mileage privately, the tax cost of accepting employer-paid fuel typically exceeds the value of the fuel itself. Many employers and employees therefore agree to remove private fuel benefit and the employee pays for their own private fuel. Opting out: To avoid the fuel benefit charge, the employer must not pay for any private fuel at all during the tax year. If even a small amount of private fuel is paid by the employer, the full annual charge applies -- there is no partial relief. The only exception is if there is a formal arrangement to repay all private fuel costs. Electric vehicles: Electric cars have no fuel benefit charge because electricity is not classified as 'fuel' for BIK purposes. This is another advantage of EVs over petrol or diesel company cars.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.