Employer-provided ‘free’ fuel for private mileage: benefit or liability?

For 2010/11, the Government set figure for calculating the tax due on employer-provided ‘free’ fuel for private use in a company car rises from £18,000 to £18,800 applicable from 6 April 2011. For vans, the fuel benefit charge rises from the current £500 to £550. To calculate the tax, you need to know:

• The car’s combined fuel consumption and BIK tax percentage
• The price of fuel used
• The driver’s marginal tax rate and Government set figure – £18,800 from 6 April 2011

To know if free fuel is a benefit or liability, you need to calculate your break-even mileage. If the number of private miles you cover is less than this break-even mileage, consider paying for the fuel yourself as it will cost less than your tax liability. If the number of private miles you cover is greater than the break-even mileage, you are better off paying the tax.

Last updated: March 2011