Company Car Driver’s Private Fuel Tax

Any free fuel employees receive for private journeys is treated as a form of taxable income called Benefit-In-Kind (BIK).

BIK tax on private fuel can be complicated. Here’s a simple tax guide for fleet managers:

If your business pays company car drivers a fuel allowance for private journeys (which they don’t repay), they may be liable for additional tax.

How much tax your employees pay depends on:

1. The P11D value of private fuel, which is set annually by HMRC (£27,800 for 2024/25 tax year)

2. The BIK rate for their company car

How to calculate BiK on private fuel

To calculate the amount your company car drivers will be taxed on private fuel, multiply the P11D value of the free fuel by the BIK rate for their company vehicle. Then multiply this by the driver’s marginal tax rate.

Remember:

If an employee’s salary is close to a higher rate of income tax, they may pay additional tax at the higher rate.

It is often more cost-effective for employees to pay for private mileage. Find out using our Company Car Tax Calculator. 

Benefit-in-kind: BIK is a tax you pay when your company car is used for non-business mileage, i.e. private use. Click here to learn more about benefit-in-Kind car tax bands.