New HMRC VAT road fuel scale charges were introduced on May 1, 2026. These changes will significantly affect thousands of drivers in the UK.
Vehicles emitting less than 120g of CO2 per kilometre will incur a VAT-inclusive charge of £657 for a 12-month period. The charge increases in bands of 5g/km, reaching £2,297 for vehicles emitting 225g/km or more.
Drivers have options regarding VAT recovery. They can recover VAT in full, not recover any VAT, or track the split between business and personal mileage to partially recover VAT. HMRC updates these rates annually, impacting how drivers account for business vehicle fuel consumption.
For vehicles without a CO2 emissions figure, the CO2 band is determined by engine size. Engines of 1,400cc or less fall under the 140g/km band, while those above 1,400cc but under 2,000cc fall under the 175g/km band.
Drivers are being urged to familiarize themselves with new HMRC rates. The new VAT fuel rates will be in place until April 30, 2027. HMRC states that drivers should work out how much of the accounting period is used for business purposes and record it as a percentage of the accounting period.
As these changes take effect, many drivers may need to adjust their budgeting and accounting practices. Observers expect confusion among those unfamiliar with the new structure.
