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The fuel benefit charge is very expensive and it may be the case that you can pay more tax on the fuel than on the company car.

This will be the case where the list price of the car is less than the fuel multiplier (£22,100 for 2015/16). You may also find that you pay more in tax for the benefit of private fuel than you actually spend on fuel for private mileage.

There are various ways to reduce the tax payable in respect of fuel:

• Changing to a company car with a lower emissions rating will reduce the appropriate percentage and consequently the fuel benefit charge.
• Reimbursing the company for every drop used privately will reduce the fuel scale charge to nil. Eliminating the benefit eliminates the associated tax charge. To make this work, the employee needs to be required to reimburse the full cost of all private fuel and must actually do so. If your private mileage is low, this can be a valuable tax saving for both you and the company. Reimbursement can be made using actual costs or HMRC advisory fuel rates. This is because the current multiplier of £22,100 (2015/16 rate) used in calculating the fuel benefit means that the fuel benefit is often not worthwhile, particularly when pump prices fall. It can be cheaper to pay for the fuel than to pay the tax on the benefit.

Where the fuel benefit is eliminated, the company saves Class 1A NIC at 13.8% on the value of the benefit.