If your business provides company cars or vans with fuel for private use, there is another cost increase on the horizon.
HMRC has confirmed that car and van fuel benefit charges will rise for the 2026/27 tax year, in line with inflation, with the car fuel benefit multiplier increasing to £29,200 from 6 April 2026.
While this change is driven by inflation rather than policy, it still has real tax and National Insurance consequences for both employers and employees.
How the fuel benefit system works
When an employer pays for fuel that an employee can use for personal journeys in a company vehicle, HMRC treats this as a taxable benefit.
In these instances, rather than tracking actual fuel usage, a fixed system is used known as the fuel benefit multiplier.
This figure is then multiplied by the vehicle’s CO₂ emissions percentage to calculate the taxable value of the fuel benefit.
That resulting value is:
A key point is that the charge applies regardless of mileage, so that even a small amount of private fuel can trigger the full benefit in kind charge.
Updated fuel benefit figures for 2026/27
From 6 April 2026, the updated flat rate values will be:
These increases reflect the September 2025 Consumer Price Index (CPI) and apply automatically for the new tax year.
Who is affected by these increases?
These changes apply to businesses that:
For employees, the higher multipliers mean an increased taxable benefit, even if their driving habits have not changed.
For employers, higher benefit values lead directly to increased National Insurance costs.
In many cases, the tax cost of providing fuel for private use outweighs the perceived value, particularly for higher emission vehicles.
Alternatives such as limiting fuel to business mileage only or reimbursing private mileage at approved rates may offer a more cost-effective solution.
Planning ahead for April 2026
Although the new rates do not take effect until the 2026/27 tax year, reviewing your vehicle policy sooner allows time for informed decisions.
Small changes to how fuel is provided can lead to meaningful savings and avoid unexpected tax charges.
We can help you understand the real cost of fuel benefits in your business and assess whether your current arrangements still make sense in light of the increased rates, so please get in touch.
