Fuel Benefit Calculator 2025/26
Last updated: February 2026
Calculate tax on free private fuel from your employer
Is Free Fuel Worth It?
How to Avoid Fuel Benefit Tax
Pay your employer for every drop of private fuel used. Keep detailed records of private vs business mileage. This completely eliminates the fuel benefit charge.
If you only reimburse some of your private fuel, you'll still pay tax on the full fuel benefit. It's all or nothing.
Only use the company car for business journeys. Use your own vehicle or other transport for private trips.
Electric cars have just 2% appropriate percentage in 2025/26. Even with free electricity, the tax is minimal compared to petrol/diesel.
Fuel Benefit Comparison by Car Type
| Car Type | CO2 Example | Appropriate % | Tax (Basic) | Tax (Higher) |
|---|---|---|---|---|
| Electric | 0 g/km | 2% | £111 | £222 |
| Plug-in Hybrid | 50 g/km | 12% | £667 | £1,334 |
| Efficient Petrol | 100 g/km | 25% | £1,390 | £2,780 |
| Average Petrol | 130 g/km | 32% | £1,779 | £3,558 |
| Large SUV | 180 g/km | 37% | £2,057 | £4,114 |
How Fuel Benefit Tax Works
If your employer provides free fuel for private use in a company car, you'll pay tax on a "fuel benefit". This applies even if you only use a small amount of private fuel.
Example: £27,800 × 29% × 20% = £1,612.40
The Appropriate Percentage
The same percentage used for company car tax (based on CO2 emissions) applies to fuel benefit. Lower emissions = lower percentage = less tax.
Key Points
- The multiplier (£27,800) is the same regardless of actual fuel used
- Even using £100 of private fuel triggers the full benefit
- You must reimburse ALL private fuel to avoid the charge - partial doesn't count
- The charge is proportional if fuel is only provided for part of the year
Appropriate Percentage Rates 2025/26
| CO2 (g/km) | Electric | Hybrid (0-50km) | Petrol | Diesel |
|---|---|---|---|---|
| 0 | 2% | 2% | - | - |
| 1-50 | - | 2-14% | - | - |
| 51-54 | - | 15% | 15% | 19% |
| 55-59 | - | 16% | 16% | 20% |
| 60-64 | - | 17% | 17% | 21% |
| 65-69 | - | 18% | 18% | 22% |
| 70-74 | - | 19% | 19% | 23% |
| 75-79 | - | 20% | 20% | 24% |
| 80-84 | - | 21% | 21% | 25% |
| 85-89 | - | 22% | 22% | 26% |
| 90-94 | - | 23% | 23% | 27% |
| 95-99 | - | 24% | 24% | 28% |
| 100-104 | - | 25% | 25% | 29% |
| 105-109 | - | 26% | 26% | 30% |
| 110-114 | - | 27% | 27% | 31% |
| 115-119 | - | 28% | 28% | 32% |
| 120-124 | - | 29% | 29% | 33% |
| 125-129 | - | 30% | 30% | 34% |
| 130-134 | - | 31% | 31% | 35% |
| 135-139 | - | 32% | 32% | 36% |
| 140-144 | - | 33% | 33% | 37% |
| 145-149 | - | 34% | 34% | 37% |
| 150-154 | - | 35% | 35% | 37% |
| 155-159 | - | 36% | 36% | 37% |
| 160+ | - | 37% | 37% | 37% |
Note: Diesel adds 4% unless RDE2 compliant. Maximum 37%.
Fuel Benefit Changes and Trends: What to Expect
The fuel benefit charge has increased steadily over recent years as the government seeks to encourage the transition to electric vehicles. Understanding the trajectory of these changes can help you make better company car decisions.
Historical Fuel Benefit Multiplier
The fuel benefit charge multiplier has risen significantly over the past decade. In 2015/16 it stood at £22,100, rising to £23,400 in 2018/19, £24,600 in 2020/21, and reaching £27,800 for 2025/26. This steady increase means that taking free private fuel on a conventional petrol or diesel company car becomes more expensive each year. Meanwhile, the appropriate percentage for electric vehicles has remained extremely low (2% for 2025/26), creating an ever-widening tax advantage for electric company cars.
P11D Reporting Requirements
Employers must report the fuel benefit on form P11D, which is submitted to HMRC by 6 July following the end of the tax year. As an employee, the fuel benefit will be included in your P11D statement, and the tax is typically collected through an adjustment to your PAYE tax code. This means the tax is spread across your monthly pay rather than requiring a lump-sum payment. You should check your P11D carefully each year to ensure the fuel benefit details are correct, including the CO2 emissions figure, fuel type, and the period for which fuel was provided.
Class 1A National Insurance
In addition to the income tax you pay on the fuel benefit, your employer must pay Class 1A National Insurance at 15% on the taxable benefit amount. For a car with 130g/km CO2 emissions, the employer's NI cost would be £27,800 x 32% x 15% = £1,334 per year. This means the total cost of providing free private fuel is substantially higher than just the employee's tax charge, which is why many employers are reconsidering their fuel benefit policies.
Switching to an Electric Company Car
The tax advantages of electric company cars are compelling. With a 2% appropriate percentage in 2025/26 (rising to only 3% in 2026/27 and 4% in 2027/28), the combined car and fuel benefit tax on an electric vehicle is a fraction of the cost for petrol or diesel alternatives. For example, an electric car with a list price of £40,000 would generate a company car tax of just £160 per year for a basic rate taxpayer (£40,000 x 2% x 20%).
Even with free electricity provided, the fuel benefit tax would be only £111 per year (£27,800 x 2% x 20%). Compare this to a typical petrol car with the same list price at 30% appropriate percentage: £2,400 car tax plus £1,668 fuel benefit tax, totalling £4,068 per year. The savings are dramatic.
Quick Tip: Fuel Benefit Charge Changes for 2025/26
The fuel benefit charge multiplier has risen to £27,800 for 2025/26, up from £27,050 in 2024/25. This increase means higher tax bills for anyone receiving free private fuel from their employer. At the same time, the appropriate percentage for pure electric vehicles remains at just 2%, making electric company cars overwhelmingly the most tax-efficient option.
If you currently drive a petrol or diesel company car with free fuel and do fewer than 10,000 private miles per year, you are almost certainly better off paying for your own private fuel and avoiding the benefit charge entirely. Speak to your employer about opting out of the fuel benefit, which is straightforward and can save you hundreds of pounds each year in unnecessary tax.
How Fuel Benefit Calculator 2025/26 Works
This calculator helps you work out VAT amounts using current UK rates. Value Added Tax (VAT) is charged on most goods and services sold by VAT-registered businesses in the UK. Understanding how VAT is calculated is essential for businesses approaching the registration threshold and for consumers wanting to know the pre-VAT price of purchases.
VAT is calculated as a percentage of the net price. To add VAT, multiply by 1.2 (for standard rate). To find the VAT-exclusive price from a VAT-inclusive amount, divide by 1.2. This tool handles both calculations automatically.
Key Information for 2025/26
The UK VAT rates are: standard rate 20% (most goods and services), reduced rate 5% (home energy, children's car seats, sanitary products), and zero rate 0% (most food, children's clothing, books, newspapers). The VAT registration threshold is £90,000 (from April 2024). Businesses with taxable turnover below this can register voluntarily. VAT returns are typically submitted quarterly via Making Tax Digital (MTD).
Example Calculation
A product priced at £500 excluding VAT: VAT at 20% = £100, giving a VAT-inclusive price of £600. Conversely, if an item costs £600 including VAT, the net price is £500 (£600 / 1.2) and the VAT element is £100. For reduced-rate items at 5%, a £1,200 energy bill includes £57.14 VAT (£1,200 / 1.05 x 0.05).
Source: Based on official HMRC 2025/26 VAT rates. Last updated March 2026.
Frequently Asked Questions
When Fuel Benefit Makes Sense
Free fuel might be worthwhile if:
- You drive very high private mileage (typically 15,000+ miles/year)
- You have a large, inefficient vehicle with high fuel costs
- Fuel prices are very high
- You're a basic rate taxpayer (lower tax bill)
Break-Even Point
To find if it's worth it, calculate:
Example: £1,612 ÷ £0.16/mile = 10,075 private miles
If you drive fewer private miles than the break-even, pay for your own fuel.
Pro Tips for Accurate Results
- Double-check your input values before calculating
- Use the correct unit format (metric or imperial)
- For complex calculations, break them into smaller steps
- Bookmark this page for quick future access
Understanding Your Results
Our Fuel Benefit Calculator provides:
- Instant calculations - Results appear immediately
- Accurate formulas - Based on official UK standards
- Clear explanations - Understand how results are derived
- 2025/26 updated - Using current rates and regulations
Common Questions
Is this calculator free?
Yes, all our calculators are 100% free to use with no registration required.
Are the results accurate?
Our calculators use verified formulas and are regularly updated for accuracy.
Can I use this on mobile?
Yes, all calculators are fully responsive and work on any device.
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