As of 1 May 2026, new VAT road fuel charges are set to affect drivers across the UK. HM Revenue and Customs (HMRC) confirmed the new rates, which will impact both petrol and diesel vehicles. For businesses, this will require using the new scale of charges when submitting VAT returns to account for private consumption of fuel on a business vehicle.
Continue reading to find out more about the new road fuel charges.
Wait…. Does a business have to pay VAT on fuel used for personal purposes?
Yep. If you’re VAT registered and you drive your company vehicle to the shops in your spare time, or use the vehicle for anything that is not strictly for the purposes of the business, you’ll need to calculate your ‘road fuel scale charges’ before or after attempting to reclaim VAT. You have three different options when it comes to accounting for VAT on diesel or petrol used for private use. These are:
- Recovering no VAT at all
- Keeping accurate mileage records of business vs personal vehicle use so that only the VAT for fuel used for business purposes is reclaimed
- Recover VAT in full, subsequently calculating and paying your road fuel charges
What are road fuel scale charges?
Road fuel scale charges are a fixed amount approved by HMRC that should be added to your VAT return to account for any private use of fuel in a business vehicle based on the CO2 emissions. Essentially, road fuel scale charges allow you to pay the correct amount of VAT when a business car is used for personal purposes.
When are the road fuel scale charges set?
The figures are updated annually by HMRC. The current rates are in place until 30 April 2027. Find out more here.
Do the road fuel scale charges apply to me?
In order to pay road fuel scale charges, you should satisfy the following:
- You’re a VAT-registered business
- You reclaim VAT on fuel purchased for company cars
- You use the company cars for both business and personal use
Fuel scale charges apply whether you are a sole trader, limited company or partnership. The charges do not apply to electric cars, and you also won’t need to factor them in if you use the vehicle solely for business use.
How can I avoid the road fuel scale charges?
There are some other circumstances where you can avoid the charges. These include:
- When you only reclaim VAT on business miles
- The vehicle is a shared business resource/carpool car with limited personal access
- All employees or those with access to the vehicle personally reimburse private-use fuel
- VAT is not reclaimed on fuel purchases
If you’re exempt due to the vehicle being a pool car, keep in mind that you must adhere to strict HMRC guidelines concerning the definition of a pool car.
How do road fuel scale charges work?
Charges are determined by your vehicle’s CO2 emissions and the VAT accounting period. You can use the online calculator provided by GOV.UK to calculate what you may owe, which only requires a few details and will save you the mathematical headache of attempting to figure it out yourself. In practice, though, the road fuel scale charges process works similarly to the following:
- First, you need to identify the correct vehicle. This must be VAT-registered via the business and be available for both business and private use.
- You’ll then need to identify the CO2 emissions figure. This can usually be found in the owner’s manual or on the V5C. For older cars, you can use a default engine size band. There’s also more guidance on finding this figure from HMRC here.
- Identify your correct scale charge value. Find this in the HMRC charges table by applying your accounting period length. (e.g. monthly, quarterly or annually.)
- Reclaim and declare your VAT as usual when completing your VAT return, ensuring to add the VAT amount of the fuel scale charge.
- You’ll then pay a fixed amount of VAT based on your car’s emissions and your accounting period. This ‘flat rate’ method avoids keeping on top of all paperwork and tracking all personal-use mileage.
However, if you don’t use your company car for personal use all that much, you may end up paying more than simply claiming for your business miles. On the flip side, though, if the car is used for a lot of private journeys, the flat rate is likely to be adequate – or even exceed – what you’d otherwise calculate.
Road fuel scale charges vs fuel benefit charges
As a business owner, there are a lot of things to keep track of, which is why you might easily confuse road fuel scale charges with fuel benefit charges. However, these are two different things. The fuel scale charge is a VAT matter while the fuel benefit charge is about income and National Insurance. See below for more information:
| Fuel Scale Charges | Fuel Benefit Charges |
| Business employees or owners of a VAT-registered SME use a company vehicle for private matters alongside normal business use. Fuel scale charges provide a way for the business to account for VAT on private-use fuel. | An employer provides fuel for an employee’s private use in a company car. This is a benefit-in-kind. The employee pays tax accordingly, and the employer pays Class 1A NICs. |
VAT loans: take the pressure off HMRC deadlines with a flexible loan
The road fuel charges can feel like just another unwelcome (and unexpected) payment that you’re not able to make, particularly if you’ve only recently crossed the VAT registration threshold. VAT loans from White Oak UK are designed to ease that pressure and keep you compliant, offering same-day decisions that will allow you to move forward with freedom.
Chat to one of our VAT loans experts today on 0333 014 9000, or explore the full range of products here. Alternatively, if you want to simply see what you’re eligible for without affecting your credit score, you can do so here.
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