For UK company vehicles, a fuel purchase can raise three separate questions: whether an employee receives taxable private fuel, how the business accounts for VAT, and which rate applies to fuel reimbursement or repayment. Keep those decisions separate even when they use the same payment and receipt.
This guide covers company cars and vans. For an employee using their own vehicle, use the HMRC approved mileage-rate guide instead. The figures below were checked against HMRC on 7 October 2026.
The three tax questions
| Question | Relevant rules | Evidence to keep |
|---|
| Has the employer provided private fuel for a company car? | Company-car fuel benefit and any exemption or reduction | Vehicle details, availability, private use and any repayment |
| How much fuel VAT can the business recover? | Input VAT, business use and any fuel scale charge | Supplier VAT evidence and records supporting the chosen method |
| How should business fuel be reimbursed or private fuel repaid? | Advisory fuel or electricity rates and actual-cost evidence where relevant | Journey dates, mileage, vehicle and applicable rate |
Paying for fuel with a business card does not settle any of these questions by itself.
Company car fuel benefit in 2026/27
HMRC's fuel benefit multiplier for 2026/27 is £29,200. For a full year before any applicable reduction:
Taxable fuel benefit = £29,200 × the car's appropriate percentage.
Use the percentage applicable to the actual vehicle, including relevant supplements. For low-emission hybrids, CO₂ alone may not be enough: electric range is also relevant. Check the HMRC percentage table for the tax year rather than carrying forward an old example.
Worked example: a petrol car at 130 g/km
Assume the 2026/27 appropriate percentage is 32%, the fuel benefit applies for the full year and there is no reduction or exemption.
| Calculation | Amount |
|---|
| Taxable fuel benefit: £29,200 × 32% | £9,344 |
| Employee income tax at an assumed 40%: £9,344 × 40% | £3,737.60 |
The employer also pays Class 1A National Insurance under the applicable rules. The employee's actual tax position may differ. The benefit is a statutory calculation, not simply the amount spent on private fuel.
A partial repayment does not automatically reduce the charge pound for pound. To eliminate the charge through repayment, check the making-good conditions and deadline with payroll. HMRC also provides qualifying reductions for unavailability, withdrawal of free fuel without reinstatement and sharing. It would therefore be wrong to assume that every instance of private fuel always creates an unreduced full-year charge.
Electric company cars and vans
Electricity is not treated as fuel for the company-car fuel benefit charge. That does not remove company-car benefit or decide every charging expense's tax treatment.
For vans, HMRC lists a £4,170 standard van benefit and £798 van fuel benefit for 2026/27 where the charges apply. The company van rules include restricted private use and other conditions; zero-emission vans receive separate treatment. Do not apply the car's CO₂ multiplier to a van.
Advisory fuel and electricity rates
HMRC advisory fuel rates apply to company cars in the specified situations: reimbursing employees for business fuel and calculating repayment for private fuel. Petrol, diesel and LPG rates depend on engine size. Hybrids are treated as petrol or diesel cars for these rates.
From 1 September 2026, the advisory electricity rates for fully electric company cars are:
| Charging location | Advisory rate |
|---|
| Home | 7p per mile |
| Public | 15p per mile |
For mixed home and public charging, HMRC permits a fair and reasonable apportionment based on the charging at each location. Keep the calculation and evidence. A higher actual cost per mile needs support; do not automatically apply the public rate to every journey.
Rates are reviewed quarterly, with changes effective on 1 March, 1 June, 1 September and 1 December. Previous rates can be used for up to one month after new rates apply. Record the rate and effective period used for each calculation. These are not the approved mileage rates for an employee's own car.
VAT on fuel: choose and evidence the method
A VAT-registered business must assess both its entitlement to input VAT and any private use. HMRC's guidance on vehicle and fuel costs describes the options, including business-only recovery, recovery with a fuel scale charge for mixed use, and choosing not to reclaim fuel VAT.
Business-use recovery: keep sufficiently detailed mileage and purchase records to support the business portion. A merchant category or an approved card limit cannot establish the business/private split.
Recovery with a fuel scale charge: where applicable, recover eligible fuel input VAT and account for private use using the relevant scale charge. Choose the correct vehicle band, effective table and VAT accounting period. This simplifies the VAT private-use calculation; it does not remove the need for supplier evidence, records supporting the method or mileage records needed for other tax questions.
No fuel VAT recovery: assess the scope of that choice with your accountant. HMRC's guidance explains that choosing not to reclaim fuel VAT applies to all vehicles, rather than allowing selective recovery simply to avoid an inconvenient scale charge.
Keep the supplier's VAT invoice or qualifying receipt. A fuel-card statement alone is not a substitute for the required tax evidence. An invoice's presence also does not make every amount on it recoverable.
Build a reviewable monthly record
For each vehicle, connect the driver or responsible person, supplier documents, card payments and journey records. Record the business/private-use decision, any repayment, the rate applied and the reviewer. Resolve missing evidence before the payroll or VAT deadline.
Use a fleet card policy to define permitted purchases, receipt deadlines and exceptions. Card controls support that policy; they do not establish the tax outcome. For shared vehicles, mid-year changes or salary-sacrifice arrangements, have payroll or your tax adviser assess the specific facts.
Rally combines prepaid Visa spending with receipt collection through WhatsApp. AutoMatch helps connect documents and payments, and finance reviews outstanding details before downloading accounting exports. Retain the source documents and the mileage calculations alongside that handover. Rally does not issue the supplier's fuel VAT invoice or decide the employee's fuel benefit.
For the commercial choice and current card costs, see the UK fuel-card guide. To test the payment-to-accounting workflow with your own records, book a walkthrough.
