Car fuel benefit multiplier increase: What businesses need to know
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.
What is the car fuel benefit multiplier?
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:
- Take the car fuel benefit multiplier
- Multiply it by the relevant CO₂ emissions percentage of the vehicle
- The result is the cash equivalent of the fuel benefit
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.
What is changing from April 2026?
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:
- Car fuel benefit multiplier: £29,200 for 2026/27 (up from £28,200 in 2025/26)
- Flat-rate van benefit charge: £4,170 (up from £4,020)
- Van fuel benefit charge: £798 (up from £769)
These increases affect employers that provide:
- Company cars with fuel paid for private use
- Company vans available for private use
- Fuel for private mileage in company vans
How this impacts businesses and employees
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.
A good time to review your approach
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.
