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Cost-saving ideas: Are you really benefitting from the private fuel benefit?

2 min to readLeasing
While the private fuel benefit is not as popular as it once was, if your company still offers it, this is a good time to take a fresh look at what you actually get for your money.

By Dominic Surlis, Specialist Consultant

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HMRC recently confirmed that the car fuel benefit charge is increasing by 10%. This adds £2,500 to the taxable charge, taking it to £27,800. The result of this change is that unless your drivers are doing a lot of personal miles every single month, the private fuel benefit probably isn’t worth it.

Here’s why. Imagine a higher-rate taxpayer in a diesel company car rated as 110 g/km CO2. They will pay £250 a month in tax for their ‘free’ private fuel, no matter how much they actually use. Even with today's high fuel prices, that £250 could buy 30 gallons of fuel, so unless they drive more than 1,500 personal miles every month, they’ll probably be losing money from this benefit. Their employer is paying for however much fuel they actually use, and on top of that, their employer is paying £86 per month in National Insurance. When the driver is making a net loss, this makes no sense at all.

When we write our cost-saving articles , we normally have to be careful and hedge what we’re saying, as something that works for one company might not be right for another. But here, I think we be confident in suggesting that many companies who are still using the private fuel benefit would be better off giving up on it entirely and just using fuel cards for business mileage. Even for the small percentage of drivers who do enough personal mileage to derive a benefit, the company can usually buy them out more cheaply than continuing the benefit.

It’s certainly worth taking a close look at what it offers to see if you can create savings for your drivers and business.


From April 2023:
Car fuel benefit multiplier
Appropriate % @ 110 g/km RDE2 diesel
Taxable BIK
Tax @ 40% (pa)
Tax @ 40% (pcm)
E'ers class 1a NIC @13.8% (pa)
E'ers class 1a NIC @13.8% (pcm)
Fuel costs, w/e 9th Jan 2023:
Diesel pence per litre
Diesel £ per gallon
Gallons per £250
Expected MPG
Miles per £250
Published at 30 January 2023
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30 January 2023
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