HMRC Introduces New VAT Road Fuel Scale Charges with 22 Bands Up to £2,297

HMRC has announced revised VAT road fuel scale charges effective from May 1, 2026, which could lead to increased costs for drivers of petrol and diesel business vehicles. These changes affect how businesses calculate VAT on fuel, with 22 emission-based charge bands now in place, ranging from £657 up to £2,297 depending on the vehicle’s CO2 emissions.

Under the new rules, businesses must apply the updated scale rates from the start of their next accounting period on or after May 1, 2026. The VAT charge is calculated based on the vehicle’s CO2 emissions and the VAT accounting period, which can be one, three, or twelve months.

Hugh Acland, Chief Commercial Officer at Capital on Tap, warns that many businesses tend to reclaim VAT in full and then apply the scale charge without assessing if it is the most cost-effective approach. Because the scale charge is a flat rate rather than based on actual fuel usage, drivers with low private mileage might end up paying more VAT than necessary.

Acland suggests that alternatives, such as a mileage-based VAT reclaim or claiming VAT solely on business use, might be more financially advantageous in some cases. He stresses that once a scale charge is selected, it must be applied consistently across all vehicles in the business, making the initial decision critical.

Here is a snapshot of the new VAT road fuel charges based on CO2 emissions: