How is the fuel benefit charge for a company car calculated in 2026/27?

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If an employer provides fuel for private motoring in a company car, the employee faces an additional benefit in kind: the car fuel benefit charge. The charge is designed to recover tax on the value of free private fuel, which is a substantial perk. 2026/27 fuel benefit multiplier: £27,800. How to calculate: Fuel benefit charge = £27,800 x appropriate percentage (the same CO2 percentage used for the car BIK itself). Example: employee drives a petrol car with 120g/km CO2. Appropriate percentage for 2026/27 = 30% (CO2-based -- check HMRC company car tax tables). Fuel benefit = £27,800 x 30% = £8,340. Income Tax for basic rate taxpayer: £8,340 x 20% = £1,668/year. For higher rate: £8,340 x 40% = £3,336/year. Employee opting out: there is no partial fuel benefit -- if the employer pays for any private fuel, the full fuel benefit charge applies. Employees should calculate whether the value of free fuel exceeds the additional tax cost. Break-even point: for a 40% taxpayer with a 30% appropriate percentage car, the fuel benefit costs £3,336/year in tax. If private fuel costs are less than this (e.g., the employee only drives 3,000 private miles), it is cheaper to reimburse the employer for private fuel and have no fuel benefit. Employer Class 1A NI: 13.8% on the fuel benefit value (e.g., £8,340 x 13.8% = £1,150.92). Electric cars: zero-emission electric cars have an appropriate percentage of 4% for 2026/27, making the fuel benefit charge nominal (£27,800 x 4% = £1,112). However, as charging costs for EVs are generally low, the interaction is less significant. HMRC guidance: EIM25800 and the HMRC company car fuel benefit calculator.

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