Company paying for fuel – A useful benefit?

Having your company pay for all fuel can seem attractive but often triggers a car fuel benefit charge. For 2025/26, the charge is based on the car’s CO₂ percentage multiplied by £28,200, with taxes ranging from £846 to £10,434, plus a 15% Class 1A NIC for employers.

To avoid the charge, employees must repay the full cost of private fuel; partial repayments still incur the benefit. Using HMRC’s Advisory Fuel Rates (AFR) ensures fair reimbursement for business mileage and prevents extra tax or NIC.

In some cases, it may be efficient for the company to pay all fuel costs initially, then reassess at year-end. If not tax-efficient, the employee must reimburse private fuel costs by 6 July following the tax year.