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Company car fuel benefit charge explained

Free fuel: costly benefit

WHEN a business pays for all the fuel used by one of its company car drivers, including private mileage, it is often called ‘free’ fuel.

The reality is that it’s anything but free.

The driver is taxed on it. The taxman levies a charge. He regards it as a benefit. It’s known as ‘the company fuel benefit charge’. The tax is calculated in a similar way to company car tax (see What is company car tax? also in this Law & Tax section).

However, instead of the list price of the driver’s company car, every driver uses the same nominal list price. For the 2007/08 tax year, this has been set at

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