How Much Tax Do You Pay on a Company Fuel Card in the UK? 2026 Quick answer
You only usually pay tax on a company fuel card if it is used for private fuel.
If a fuel card is used only for business journeys, and your business keeps accurate mileage and fuel records, there should usually be no personal Benefit-in-Kind tax
If the card is used for private journeys, including commuting, HMRC may treat the private fuel as a taxable benefit. For company cars, the fuel benefit is worked out using the car’s CO2-based benefit percentage and the annual car fuel benefit multiplier. For the 2026/27 tax year, that multiplier is £29,200.
Employers may also need to pay Class 1A National Insurance on the taxable fuel benefit. For 2026/27, the Class 1A rate on expenses and benefits is 15%.
Compare fuel cards with spending controls, mileage reporting and HMRC-friendly invoices.
Contents
What is a Company Fuel Card?
Tax Implications of Company Fuel Cards
Managing Tax on Company Fuel Cards
How do we work?
Transparent, impartial, and data‑driven reviews made by a team of expert humans, never AI generated – here’s exactly how Compare Your Business Costs helps you find the best deals from trusted UK providers: click here
Authored by: Ally Cox (Business Technology & B2B Services Specialist 10+ Years’ Experience)
Reviewed by: James Ward (Telecoms Specialist, 12+ Years Experience)
Last Updated: July 2026
Fuel Card Savings Calculator UK Estimate your business fuel spend, litres used, possible fuel card discount, admin savings and total annual saving.
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Company Fuel Cards at a glance
Situation Is there usually a tax charge? What to check
Fuel card used only for business fuel
Usually no personal fuel benefit tax
Keep mileage logs and business journey records
Fuel card used for private fuel in a company car
Yes, usually taxable as a fuel benefit
Car fuel benefit multiplier and CO2 percentage
Employee repays all private fuel
Usually no fuel benefit if repaid properly
Use accurate records and HMRC advisory fuel rates
Fuel card used for commuting
Usually treated as private use
Commuting is not normally business mileage
Fuel card used in a company van with private fuel
May create a van fuel benefit
Check van fuel benefit charge
Fuel card used by a sole trader
Different rules may apply
Separate business and private fuel costs
Fuel card used by a limited company director
Can create a taxable benefit if used privately
Keep records and speak to an accountant
Fuel card with purchase controls
Helps reduce tax and misuse risk
Restrict private fuel and non-fuel purchases
Key Takeaways
A company fuel card is not automatically taxable.
The tax issue usually arises when the fuel card pays for private fuel.
Business-only fuel should not usually create a fuel Benefit-in-Kind charge if records are accurate.
Commuting is normally private travel, not business travel.
For 2026/27, the car fuel benefit multiplier is £29,200.
For 2026/27, the flat-rate van fuel benefit charge is £798.
Employers pay Class 1A National Insurance on taxable fuel benefits.
The Class 1A National Insurance rate on expenses and benefits is 15% for 2026/27.
Employees can usually avoid a fuel benefit charge by repaying all private fuel properly.
Good fuel cards can help with HMRC-friendly invoices, spending controls and mileage reporting.
What is a Company Fuel Card? A company fuel card is a payment card used to purchase fuel for business vehicles. It simplifies the process of managing fuel expenses, providing detailed statements that track fuel usage and costs. While it offers convenience and potential cost savings, it also comes with specific tax implications that businesses must address.
Read more about it here:
Tax Implications of Company Fuel Cards A company fuel card is not automatically taxable.
The tax position depends on how it is used.
If the fuel card is used only for business journeys , there is usually no taxable private fuel benefit.
If the fuel card is used to pay for private fuel , HMRC will probably treat that private fuel as a taxable benefit.
Private use can include:
commuting from home to a normal workplace
weekend driving
family use of a company car
holiday travel
personal errands
any non-business mileage
This matters because a fuel card that looks convenient can become expensive if private fuel creates a Benefit-in-Kind tax charge.
When is fuel card use tax-free? Fuel card use is usually tax-free where the card is used only for genuine business fuel – common business journeys include:
travelling to customer sites
driving between temporary workplaces
delivery routes
field service visits
business meetings away from the usual workplace
visiting suppliers
travelling between business locations
work-related site visits
To support business-only use, you should keep accurate records – these should include:
journey dates
start and end locations
business purpose
mileage
driver name
vehicle registration
fuel receipts or card statements
business/private mileage split
When does a fuel card become a taxable benefit? A fuel card can become a taxable benefit when it pays for private fuel, which can happen if:
employees use a company car privately and fuel is paid by the employer
staff commute using fuel paid by the business
directors use company-paid fuel for personal journeys
private mileage is not repaid
mileage records are poor
fuel card controls are too loose
the business cannot prove the fuel was only for business travel
This is why the issue is not simply the fuel card itself.
The issue is whether company-paid fuel is being used privately.
Compare fuel cards with driver controls and mileage reporting to reduce private-use problems.
Company car fuel card tax in 2026
If an employee uses a company car and the employer pays for private fuel, the employee may have a car fuel Benefit-in-Kind charge.
For 2026/27, the car fuel benefit multiplier is £29,200.
The taxable fuel benefit is calculated by multiplying the fuel benefit multiplier by the same appropriate percentage used for the company car benefit, and the appropriate percentage is based mainly on the car’s CO2 emissions and fuel type.
Company van fuel card tax in 2026 Company vans have different rules from company cars.
For 2026/27, the flat-rate van fuel benefit charge is £798.
A van fuel benefit can apply if an employee has private use of a company van and the employer also provides fuel for private use.
Private use of vans can be complicated because some limited private use may be treated differently, but businesses should not assume van fuel is tax-free.
If a company van fuel card is used for private journeys, check the HMRC rules or speak to an accountant.
How to avoid Benefit-in-Kind tax on fuel cards The safest way to avoid fuel Benefit-in-Kind tax is to prevent company-paid private fuel, and you can do this by:
restricting fuel cards to business use only
requiring mileage logs
blocking non-fuel purchases
assigning cards to drivers or vehicles
requiring private mileage repayment
using HMRC advisory fuel rates
checking fuel card statements regularly
using telematics or mileage reporting
setting clear fuel card policies
training staff on business vs private mileage
checking commuting rules
reviewing director fuel use
A written fuel card policy is helpful, and it should explain:
what the card can be used for
whether private fuel is allowed
how private fuel must be repaid
what mileage records are required
what happens if the card is misused
who approves exceptions
how lost cards are reported
Can employees repay private fuel? Yes, employees can usually repay private fuel to avoid or reduce a fuel benefit charge, and the repayment must cover the full cost of private fuel.
HMRC’s advisory fuel rate s are commonly used where employees repay employers for private fuel in company cars, or where employers reimburse employees for business mileage in company cars. HMRC updates advisory fuel rates regularly so always check for the latest rates.
To manage repayment properly, businesses should keep:
mileage logs
private mileage records
business mileage records
fuel card statements
repayment evidence
vehicle details
advisory fuel rate used
dates and calculations
If private fuel is not fully repaid, a fuel benefit may still apply!!
Fuel cards and commuting Commuting is one of the most common areas of confusion as travel between home and a normal workplace is usually treated as ordinary commuting, not business travel, which means employer-paid fuel for commuting can count as private fuel.
Examples of commuting include:
home to office
office to home
home to regular depot
home to usual shop, restaurant or workplace
regular workplace to home
Business mileage may include travel to temporary workplaces, customer sites or business locations away from the normal workplace, but because the rules can be fact-specific, businesses should keep clear records and get professional advice if mileage patterns are unclear.
Fuel cards for directors Company directors need to be careful with fuel cards! If a director uses a company fuel card for private journeys, the same broad Benefit-in-Kind issues can arise, which can include:
private use of a company car
commuting
family use of a company vehicle
weekend travel
holiday travel
fuel bought without mileage records
Directors should keep business and private fuel separate wherever possible, so a good approach is:
company fuel card for business fuel only
personal payment for private fuel
mileage log for all journeys
reimbursement at HMRC advisory fuel rates if needed
accountant review before P11D reporting
Fuel cards for sole traders Fuel card tax works differently for sole traders compared with employees using company cars as a sole trader can usually claim allowable business fuel costs, but private fuel is not an allowable business expense.
If the same vehicle is used for business and private journeys, the sole trader needs to split business and private use, which can be done using:
accurate mileage records
a business-use percentage
separate fuel records
mileage allowance methods, where appropriate
A fuel card can still be useful for sole traders because it gives cleaner records, but it does not make private fuel tax-deductible.
Fuel cards for limited companies Limited companies can use fuel cards for company vehicles, vans, company cars and business mileage.
The main tax issue is whether the company pays for private fuel.
For limited companies, fuel card controls matter because errors can lead to:
Benefit-in-Kind reporting
P11D administration
Class 1A National Insurance
corporation tax adjustments
VAT issues
director loan account problems
payroll or expenses complications
So if you have a limited company, you should have a clear fuel card policy and ensure fuel card use matches company records.
What records do you need to keep? Good records are the best way to avoid fuel card tax problems, so you should keep:
fuel card invoices
VAT invoices
mileage logs
business journey details
private journey details
vehicle registration
driver name
odometer readings
repayment records
advisory fuel rate calculations
expense claims
fuel card policy
evidence of spending controls
Fuel card statements are useful, but they may not prove whether a journey was business or private.
Mileage records are still important.
Fuel card tax vs mileage reimbursement A fuel card is not always the best option for every business, and some businesses choose to reimburse employees for business mileage instead.
Fuel card
A fuel card may be better if:
staff use company vehicles
the business wants fuel invoices
you want spending controls
you want to reduce receipt admin
drivers buy fuel regularly
you need VAT-friendly records
you want fuel reporting by driver or vehicle
Mileage reimbursement
Mileage reimbursement may be better if:
employees use their own vehicles
you want to avoid private fuel issues
the business does not provide company cars
mileage is occasional
admin is simple
you want to use approved mileage rates
For 2026/27, GOV.UK’s travel mileage rates page lists Approved Mileage Allowance Payments for cars and vans at 55p per mile for the first 10,000 business miles and 25p per mile above that.
Best fuel card features for tax control If tax compliance is a concern, look for fuel cards with:
HMRC-friendly invoices
driver-level reporting
vehicle-level reporting
spending limits
product restrictions
fuel-only controls
online account access
downloadable reports
VAT invoice support
alerts for unusual spend
odometer capture
integration with fleet systems
EV charging reporting
card blocking
lost card controls
These features can help your business manage fuel properly and reduce private-use mistakes.
Compare fuel cards with spending controls, mileage reporting and consolidated invoices.
What to check before choosing a fuel card Before choosing a company fuel card, ask:
can the card be restricted to business fuel?
can non-fuel purchases be blocked?
can spending limits be set?
can cards be assigned to drivers or vehicles?
are HMRC-compliant invoices provided?
is VAT reporting easy?
can reports be downloaded?
does the card capture odometer readings?
are there alerts for unusual spending?
can the card support diesel, petrol, HVO or EV charging?
what fees apply?
what fuel stations accept the card?
are motorway sites included?
are supermarket forecourts included?
can cards be cancelled quickly?
does the provider support small businesses?
what happens if an employee leaves?
Choosing the cheapest card is not always the best move if it lacks controls and reporting.
FAQs About Company Fuel Cards and Tax Implications How does the Benefit-in-Kind (BIK) tax work on company fuel cards?
If a company fuel card is used for personal travel, it’s considered a Benefit-in-Kind (BIK) and is taxable. The tax is calculated based on the car’s CO2 emissions and the type of fuel used.
How do I calculate BIK tax on a company fuel card?
BIK tax is calculated as a percentage of the vehicle’s list price, which ranges from 2% to 37% depending on CO2 emissions and fuel type.
Do I need to pay National Insurance on company fuel cards?
Yes, employers must pay Class 1A National Insurance Contributions on the taxable fuel benefit, which is currently 13.8% of the taxable value.
What is the Fuel Scale Charge?
If a company fuel card is used for both business and personal use, businesses can pay a fixed Fuel Scale Charge based on the vehicle’s CO2 emissions. This charge is reported on the P11D form.
Can employees reimburse personal fuel use to reduce tax liability?
Yes, employees can reimburse the company for the personal fuel used. The reimbursement must be made at HMRC’s Advisory Fuel Rates (AFR) to reduce the overall BIK tax liability.
What are the benefits of opting out of the fuel benefit?
Opting out of the fuel benefit and reimbursing employees with Mileage Allowance Payments (AMAP) can help avoid BIK tax on fuel cards and might be more cost-effective for the business.
What records do I need to keep for company fuel card tax purposes?
You must maintain accurate records, including mileage logs, fuel receipts, and regular checks to ensure all fuel usage is correctly documented for tax reporting purposes.
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Hi, I’m Ally Cox , a senior copywriter and blogger at CompareYourBusinessCosts.co.uk, the UK’s trusted platform for comparing business services.over a decade of experience in the B2B sector, I specialise in simplifying complex topics like leased lines, VoIP, business energy, HR and payroll solutions, accounting software, and EPOS systems .HR, copywriting, and business operations- from clocking-in systems to card machines and office technology .informed, confident decisions when choosing products and services that improve efficiency and save money.
