Glossary · UK
What is Car Fuel Benefit Charge?
The taxable benefit that arises when an employer provides free fuel for private use of a company car.
Full Definition
The car fuel benefit charge is a benefit in kind that applies when an employer pays for fuel used on private journeys in a company car, including commuting. It is worked out by multiplying a fixed fuel benefit multiplier, set by HMRC each year, by the same percentage that applies to the car based on its CO2 emissions and fuel type. This means a car with a high benefit percentage produces a large fuel charge, while a low-emission car produces a small one. The employee pays Income Tax on the resulting figure at their marginal rate, and the employer pays Class 1A National Insurance at 15% for 2026/27. Because the multiplier is large, free private fuel is often poor value, and many employees are better off paying for their own private fuel or reimbursing the employer in full to avoid the charge entirely. Fully electric cars have no fuel benefit charge because electricity is not treated as a fuel for these rules. The fuel benefit multiplier is uprated most years, so check the current HMRC figure before calculating the charge.