The fuel scale charge is not a bill for the fuel you have actually used. It is a benefit-in-kind cash equivalent for having free private fuel, and it is taxed on top of the car benefit charge itself.
How it is calculated
Take the car fuel benefit multiplier, which is £29,200 for 2026/27 (uprated from 6 April 2026, confirmed on GOV.UK), and multiply it by the car's appropriate percentage. That percentage is the same one used for the car benefit charge itself and is set by the car's CO2 emissions and fuel type, so a higher-emitting car produces a bigger charge. The resulting cash equivalent is taxed as earnings at your marginal rate, usually through your tax code or payroll, and your employer pays Class 1A National Insurance on the full cash equivalent (15% for 2026/27). The charge does not depend on how much fuel you actually use: 500 private miles or 15,000, it is identical.
Is it ever worth keeping?
For most drivers doing modest private mileage, no. Take your numbers. Suppose, as an illustration, your car's appropriate percentage were 30% and you are a 40% taxpayer: the cash equivalent is £29,200 × 30% = £8,760, costing you £3,504 a year in tax. Against that, 4,000 miles of private petrol is very unlikely to cost more than about £600–700. Giving up the free fuel and paying for your own would save you thousands.
The break-even test is simple: £29,200 × your car's appropriate percentage × your marginal tax rate, compared with your private fuel cost. Free fuel can only be worth it for very high private mileage, a low-CO2 car, or a basic-rate taxpayer on a modest percentage. For you, the numbers point one way: give up the free fuel, pay for your own private mileage, and ask payroll to remove the fuel benefit from your code. Business miles you drive can then be reclaimed at HMRC's advisory fuel rates instead.
