Does Premium Fuel Make a Difference?

Updated

Feb 9, 2026 8:12 PM

Written by Nathan Cafearo

Premium petrol rarely benefits most cars. See when it matters, current UK pump prices, and how rising fuel benefits and van charges affect your tax bill.

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What you really pay at the pump

Most drivers in the UK face a simple choice at the forecourt: standard unleaded or its pricier premium counterpart. The question is not whether premium sounds better - it is whether it delivers meaningfully better results for your car and your wallet. Independent UK tests repeatedly find that premium fuels rarely improve fuel economy or performance in the majority of everyday petrol cars. Unless your engine specifically calls for higher octane to prevent knocking, the gains are usually marginal at best. For most motorists, standard unleaded is entirely safe for the engine and does the job without the extra cost.

At the same time, the price of fuel has been volatile. Early 2026 averages put petrol at around 145-160p per litre and diesel at roughly 155-170p per litre, with regional differences widening the gap. In that context, paying extra for premium can quietly add up over a year without giving you measurable returns. If you drive a turbocharged or high-compression engine, premium can help manage knocking and maintain peak performance. For a typical hatchback or family saloon, you are unlikely to notice a change in real-world driving.

Company car users face an additional calculation. HMRC is increasing the car fuel benefit multiplier to £29,200 for 2026/27, with the van fuel benefit rising to £798 and the flat-rate van benefit charge moving to £4,170 from 6 April 2026. These changes are tied to inflation and mean higher benefit-in-kind liabilities where employers provide fuel for private use. It is a nudge to review whether taking free fuel is still cost-effective, especially if your private mileage is modest.

Understanding octane is not about hype - it is about whether your engine really needs it.

A simple rule of thumb: follow your owner’s manual. If it recommends or requires higher octane, stick with it. If it says standard unleaded is fine, premium will not unlock hidden efficiency or power. The key is to make a clear, informed choice that suits your vehicle, your mileage, and your tax position if you drive for work.

Who this guide will help

If you are a UK driver weighing up premium versus standard petrol, this guide is for you. It is particularly useful if you own a typical family car, commute regularly, or manage fuel costs carefully in the face of current pump prices. Company car and van users will also find practical guidance here, as HMRC’s uprating of fuel benefits and van charges can change the maths on taking employer-provided fuel.

Fleet managers and small business owners can use this to brief drivers and review fuel policies. If you run a high-performance or turbocharged engine and wonder whether premium is justified, we set out when higher octane is genuinely beneficial. Wherever you sit, the aim is simple: help you spend wisely and avoid paying for features you will not use.

Your choices at the pump

Stick with standard unleaded - the default for most petrol cars, safe and cost-effective.
Use premium petrol only if recommended - beneficial for high-compression or turbocharged engines.
Mix occasionally when travelling - acceptable if your manual allows, but benefits are limited.
For diesels, choose reputable standard diesel - premium diesel rarely transforms everyday performance.
Review company fuel perks - check if fuel benefit-in-kind still makes financial sense for you.

Money, tax and risk at a glance

Option / Scenario	Typical Cost Today	Likely Impact	Possible Return	Key Risks
Standard unleaded (petrol)	145-160p per litre	Reliable, manufacturer-approved for most cars	No performance gain, stable running	Paying extra elsewhere for minimal benefit
Premium petrol	+8-15p per litre vs standard	Helps high-performance or turbo engines only	Smoother running where octane is required	Unnecessary spend with no measurable gains in average cars
Company car - fuel benefit provided	BIK based on £29,200 multiplier from 2026/27	Higher tax if employer pays for private fuel	Worth it only at high private mileage	Overpaying tax versus self-funding fuel
Company van - fuel benefit	BIK based on £798 from 2026/27	Modest but rising tax cost	Convenience if employer covers fuel	Paying tax when private use is limited
Van benefit charge (private use)	Flat rate £4,170 from 6 April 2026	Higher annual BIK for accessible vans	Predictable budgeting for fleets	Increased total cost of ownership
Hybrids - future BIK trend	Appropriate percentages rising to 18% in 2028-29 for 1-50g/km	Gradual increase in tax on low-emission cars	Still lower BIK than many petrol models	Reduced relative advantage over time

Can you use premium - and should you?

Eligibility boils down to what your car’s manufacturer specifies. The owner’s manual will state a recommended octane rating. If it says standard unleaded is suitable, your car’s engine management is designed to run safely without premium. Using higher octane in that case will not damage the engine, but it typically will not improve economy or power either. Where a manual recommends higher octane for best performance, you may notice smoother acceleration or better resistance to knocking under load. If the manual states higher octane is required, you should not substitute lower grades.

For company car and van users, the key question is benefit-in-kind exposure. If your employer provides fuel for private mileage, the car fuel benefit is calculated using a fixed multiplier that rises to £29,200 in 2026/27. For vans, the fuel benefit increases to £798 and the flat-rate van benefit charge moves to £4,170. These figures are applied via your tax code or self assessment. The result is a higher annual tax bill if you accept private fuel. Consider your annual private mileage and the pump price of standard fuel before deciding. Kandoo cannot provide tax advice, but we can help you finance a vehicle that suits your budget and reduces running costs over the long term.

How to decide - step by step

Check your owner’s manual for the recommended octane rating.
Confirm whether premium is recommended or strictly required.
Compare local prices for standard versus premium petrol.
Track your real-world mpg over two full tanks.
If company fuel is offered, calculate your BIK cost.
Assess private mileage to judge fuel perk value.
Re-evaluate during seasonal price changes or engine servicing.
Choose the cheapest grade that meets manufacturer guidance.

Pros, cons and key considerations

Factor	Standard Unleaded	Premium Petrol
Engine suitability	Right for most petrol cars	Best for high-compression or turbo engines
Performance feel	Consistent in everyday driving	Potentially smoother under heavy load
Fuel economy	No penalty in typical cars	Little to no gain in average cars
Cost per litre	Lower	Higher
Risk of knocking	Managed by engine controls	Further reduced where octane is needed
Value for money	Strong for mainstream vehicles	Only when manufacturer recommends or requires

Before you fill up

Premium fuel marketing can be persuasive, but the numbers matter. With petrol averaging 145-160p per litre in early 2026, paying extra for a grade that delivers no measurable benefit simply increases your annual running costs. Reserve premium for engines that can exploit the higher octane - typically turbocharged or high-compression designs where knocking control is critical. For most cars, standard unleaded remains the rational choice, backed by manufacturer guidance and independent testing.

Company car drivers should revisit their fuel benefit decisions before the 2026/27 tax year. The higher multiplier and van charges mean you could pay more in tax than the value of the fuel you use privately unless your mileage is substantial. Run the numbers with realistic mpg and local pump prices, and compare with self-funding fuel. A small adjustment now can protect your take-home pay for the year ahead.

Other routes to save money

Keep tyres correctly inflated and align wheels to reduce drag.
Service on schedule and use the right oil grade.
Remove roof racks and extra weight to improve mpg.
Plan routes to avoid congestion and cold starts.
Consider telematics-based insurance to reward smoother driving.
For fleets, adopt clear fuel policies and mpg reporting.

FAQs

Q: Will premium petrol improve my mpg in a typical family car? A: Unlikely. Independent tests in the UK show little to no improvement in economy for mainstream engines when switching from standard unleaded to premium.

Q: When does premium petrol make sense? A: If your car has a turbocharged or high-compression engine and the manufacturer recommends higher octane for optimal performance or to reduce knocking, premium can be worthwhile.

Q: What are current UK pump prices? A: Early 2026 averages are roughly 145-160p per litre for petrol and 155-170p per litre for diesel. Local factors and new forecourt pricing rules can shift rates.

Q: Can using lower octane damage my engine? A: If your manual requires higher octane, do not downgrade. Where standard unleaded is approved, it is safe and should not cause damage under normal use.

Q: How is the company car fuel benefit calculated? A: It uses a fixed multiplier that rises to £29,200 in 2026/27, applied to your car’s appropriate percentage to determine the taxable benefit for employer-provided private fuel.

Q: What is changing for vans from April 2026? A: The van fuel benefit increases to £798 and the flat-rate van benefit charge rises to £4,170, both aligned with inflation.

Q: Are hybrids still tax efficient? A: Yes, but their advantage narrows. Appropriate percentages for 1-50g/km cars rise gradually, reaching 18% in 2028-29.

What Kandoo can do for you

Kandoo is a UK-based retail finance broker that helps you fund the right vehicle for your needs. If you decide a different car would cut running costs, we can introduce you to trusted lenders and finance options to suit your budget. We keep the process clear, quick and competitive so you can drive away with confidence.

Important information

This article is for general information only and is not tax, legal or financial advice. Tax rules can change and their impact depends on your circumstances. Always check your owner’s manual and consider professional advice where appropriate.