From April 2026, the cost of providing fuel with company cars and vans is rising again.
HMRC has confirmed that car and van fuel benefit charges will increase in line with inflation for the 2026/27 tax year, pushing the car fuel benefit multiplier up to £29,200.
If your business provides fuel for private use in company vehicles, this change will directly affect both your employees’ Income Tax bills and your Employer National Insurance costs.
The car fuel benefit multiplier is a fixed figure set by HMRC that is used to calculate the taxable value of fuel provided by an employer for private travel in a company car.
The calculation works as follows:
That cash equivalent is then treated as a benefit in kind. The employee pays Income Tax on it and the employer pays Class 1A National Insurance Contributions (NICs).
Importantly, the multiplier applies regardless of how much private fuel is actually used.
HMRC has confirmed that the rates will rise in line with the Consumer Price Index, based on the September 2025 figure.
The updated figures are:
These increases affect employers that provide:
For employees, the rise means a higher taxable benefit, even though the increase is driven by inflation rather than changes to vehicle use.
For higher emission cars in particular, the tax cost of “free” fuel can be surprisingly high.
For employers, higher benefit values mean increased Class 1A NIC costs. This can add up quickly across a fleet, especially where fuel benefits are offered as standard rather than by exception.
In some cases, reimbursing business mileage only can be more tax-efficient for both employer and employee.
Understanding how the car fuel benefit multiplier works and how the new rates affect your business can help you avoid unnecessary tax costs and surprises down the line.
If you would like to review how these changes affect your specific arrangements, speaking to your accountant sooner rather than later can help you plan ahead of the new tax year.
Jim Botton – Pleasure Beach (Skegness)
