A free fuel allowance could cost you more

If you're a company car driver, you might be excused for jumping at the chance of the free fuel that some employers offer as a benefit for their employees. But you should take a closer look because current taxation means that this might not be as attractive as you first thought. If you're a fleet manager, it's vital that you make this clear to your company car drivers.

So why might it not be right for you? Well, the tax you will need to pay for the benefit-in-kind of free fuel might be more than the cost of the fuel itself. Like your company car, the tax you pay on your fuel allowance is based on the car's CO2 emissions and, if it's diesel, its Euro compliance. Based on this performance, the tax you pay could range anywhere from 15% to 35%, which means that, if you have a low private mileage, letting your employer pick up the fuel tab could cost you more.

To find out if a full fuel allowance makes sense for you or your company car drivers, visit our tax calculator.