Company fuel benefit UK 2026

By PaySlipCheck Editorial · 14 June 2026 · 5 min read

UK company car fuel benefit is one of the least-favourable BiK arrangements available. Instead of taxing you on actual private fuel value, HMRC applies a flat rate: £27,800 × your car's BiK emission % × your marginal Income Tax rate. For a higher-rate driver in a typical petrol company car (30% BiK), that's ~£3,336/year of tax — often 2-3x the value of the private fuel actually consumed. Decline the fuel benefit and pay for your own private fuel; ask employer to reduce salary or increase salary instead. This guide covers the maths + why to decline.

Verified against 4 official sources · Last reviewed 14 June 2026
On this page
  1. The maths (2026/27)
  2. Why decline
  3. When fuel benefit works
  4. The alternative
  5. In short

The maths (2026/27)

Flat rate: £27,800 Multiplier: your car's BiK % (same as company car BiK) Then: marginal Income Tax rate

Example — higher-rate, 30% BiK car: - Fuel benefit BiK: £27,800 × 30% = £8,340 - Higher-rate tax: £3,336/year - Monthly payslip reduction: ~£278

Example — higher-rate, electric car: - Fuel benefit BiK: £27,800 × 3% = £834 - Higher-rate tax: £334/year - EVs are the exception where fuel benefit can be reasonable

Why decline

Most employees drive well below £8,340 of private fuel per year: - 8,000 private miles at 40 mpg petrol = £780 in fuel - Even 15,000 private miles = ~£1,500 in fuel

You'd pay £3,336 tax on £1,500 of value. Terrible ratio.

When fuel benefit works

  • Electric company car with home charging + high private mileage
  • Very high private mileage (~30,000+ miles per year private)
  • Company car with fuel included at very low BiK (< 5%)

The alternative

  • Decline fuel benefit
  • Employer pays only for business fuel via expenses/mileage claim
  • You pay for private fuel from net pay
  • Save the tax vs the actual fuel cost

In short

UK company fuel benefit tax = £27,800 × emission % × marginal rate. Nearly always massively more than actual private fuel cost. Decline for petrol/diesel cars. Can work for EVs with home charging.

Frequently asked questions

What's the 2026/27 fuel benefit multiplier?

£27,800 — flat rate applied regardless of actual fuel consumed.

Should I take company fuel benefit?

Almost never for petrol/diesel. Occasionally for EVs. Do the maths on your specific case.

What if I only drive occasionally for private?

Definitely decline fuel benefit — the flat rate massively exceeds occasional fuel value.

Can I refuse the benefit?

Yes — decline the fuel benefit; employer still provides car + business fuel via expenses. Fuel benefit is opt-in typically.

What about van fuel benefit?

Similar rules — £862 flat rate for van fuel (2026/27) × marginal rate. Van benefit generally more sensible than car.

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Related guides

  • Tax code with BiK — Benefits in kind (company car, private medical, beneficial loans,
  • How to read a payslip — A UK payslip has up to 20+ separate lines, each with a specific
  • Tax code 1257L — Tax code 1257L is the standard UK tax code for 2026/27. The 1257
  • Salary sacrifice — Salary sacrifice is the most tax-efficient UK pension contribution
  • Is sacrifice worth it? — Salary sacrifice is typically a strong win for higher-rate
  • What is a P11D — The UK P11D form is submitted annually by employers to HMRC reporting all Benefits in Kind provided to employees. You get a copy showing your total BiK for the tax year. HMRC uses this to adjust your tax code and collect BiK tax.

More on related topics

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  • Company car vs allowance — UK company car is better than cash car allowance for electric vehicles (3% BiK) at higher-rate tax. Cash allowance is better for petrol/diesel cars at higher-rate. This guide covers the specific numbers.

Related salary breakdowns

Sources

All figures on this page are sourced from official UK government publications. We don't cite secondary commentary or other calculator sites.

  1. GOV.UK — Employer-provided benefits (Expenses and benefits)
  2. GOV.UK — P11D form
  3. GOV.UK — Income Tax rates
  4. MoneyHelper — Employee benefits

All tax figures on this page use the same configuration that powers our calculators — see our editorial standards for the review process.

Last reviewed: 14 June 2026. Next review due 14 December 2026.

Disclaimer: This page provides general information based on published HMRC and gov.scot figures. It is not personal tax or financial advice. For your specific situation, please consult a qualified accountant or contact HMRC directly.