Bradford's company car drivers are set for yet another blow in April.

Accountancy firm Baker Tilly says the provision of free fuel for private mileage is set to become a tax nightmare.

The chancellor's decision, which has been confirmed in the last few days, will see taxable benefits hiked 16 per cent in the new tax year.

David Heaton, head of employer consulting at Baker Tilly's Bradford office: "It now makes absolutely no sense for the vast majority of employees to be given free fuel for private use.

"Only the minority, who have a long daily commute, or who drive gas guzzlers with very poor fuel consumption, should stick with their company fuel cards.

"Everyone else must decide by April 5 whether to give them up.

"Employees can easily work out whether they should keep the benefit or not, by looking at their tax liabilities and the average cost of motoring per mile for their vehicles.

"It should be a very straightforward decision to make, but the timing is critical.

"This tax can only be avoided if the employee receives no private fuel whatsoever in the tax year, or if he reimburses the employer for all private mileage."

Mr Heaton says the employer perspective is complicated. He said: "Taking into account VAT, National Insurance and corporation tax relief means that, for businesses, the overall cost can be a complicated calculat-ion.

"In fact, total outgoings can amount to more than twice the cost of the fuel.

"With the employee's agree-ment, the benefit could be withdrawn, making cost savings for both parties.

"Most higher rate taxpayers, covering an average number of private miles, would be instantly better off if the allowance were withdrawn. Standard rate payers would generally need only a small increase in salary to compensate for the loss."