From 6 April 2008 the fuel benefit charge multiplier (FBC) will be increased
from £14,400 to £16,900. This will impact employees who drive company cars
and received free fuel for private use and also employers who bear Class 1A
National Insurance Contributions on the corresponding taxable benefit.
Since April 2003 the fuel benefit charge has been calculated by applying the
appropriate company car tax percentage (based on the CO2 emissions of the
company car) to a set figure known as the ‘mulitplier’.
The above inflation rise in the multiplier figure will increase the income
tax and employer national insurance otherwise due. This change is designed
to discourage the continued provision of ‘free fuel benefit’ and is part of
wider government initiative to use the tax system to encourage more
environmentally friendly behaviour by employees & employers.