HMRC confirms new VAT rates for drivers with newer cars from May 1

HM Revenue and Customs (HMRC) has confirmed new VAT rates for petrol and diesel drivers with newer cars across the UK.

New VAT road fuel scale charges came into effect on May 1, 2026, and will remain in place until April 30, 2027, with thousands of drivers expected to be impacted by the changes. Road fuel scale charges are a fixed amount approved by HMRC that are added to a VAT return to account for the private consumption of fuel in a business vehicle. These charges apply to vehicles based on CO2 emissions and the rates are updated by HMRC once every year.

The charges are accounted for by including them in Box 1 of your VAT return and are fixed amounts irrespective of the amount of private mileage you clock up.

Drivers need to work out the correct road fuel charge based on their car’s CO2 emissions, and the length of their VAT accounting period, which will be either one, three or 12 months.

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The rates increase in bands of 5g per kilometre of CO2 emissions, with VAT-inclusive charges ranging from £657 for vehicles emitting 120g or less of CO2 per km, to £2,297 for vehicles emitting 225g/km for a 12-month period.

Newer cars registered on or after March 1, 2001, have an official CO2 emissions figure recorded on the V5C registration certificate, and this can be used to identify the VAT road fuel scale charges.

HMRC said: “You’ll need to work out the correct road fuel charge, based on your car’s CO2 emissions, and the length of your VAT accounting period. This will be either one, 3, or 12 months.

“You’ll need to check your car’s CO2 emissions figure online if you cannot get this from your logbook. If the figure is not a multiple of 5, round it down to the nearest multiple of 5.

“The CO2 emissions figure may also be specified, on either a:

• UK approval certificate

“You can use one of these certificates to work out the car’s CO2 emissions figure, for the purposes of the valuation table.”

Drivers with older cars registered before May 1, 2001, will instead need to identify the CO2 band based on their car's engine size to work out the charge.

HMRC explains: “For cars first registered before 1 March 2001 the approved CO2 emissions figure is not shown on the car registration certificate (V5C).

“It will not always be included in the owner’s handbook for the car and, even if it is, the figure may not relate to that particular car and so may not be sufficiently accurate. This means that the owner or lessor of the car may not have details of the CO2 emissions figure.”

Explaining how to work out the CO2 emissions figure for older cars, HMRC said: “If your car is too old to have a CO2 emissions figure, you should identify the CO2 band based on its engine size. If its cylinder capacity is:

• 1,400 or less, use CO2 band 140

“To do this, work out how much of the accounting period you used each car for, and record this as a percentage of the accounting period. Apply this percentage to each road fuel scale charge, to get a total figure.”

Drivers have the option of recovering the VAT in full and paying the road fuel scale charge, not recovering any VAT at all, or tracking the split between business and personal mileage to partially recover some VAT.

Listed are the new VAT road fuel scale charges from May 1, 2026, to April 30, 2027, for a 12 month, three month and one month accounting period, as confirmed by HMRC:

CO₂ Emissions: 120g/km or less

• 12 Month Period: £657.00

CO₂ Emissions: 125g/km – 150g/km

• 125g/km: £983.00 (12 months) | £246.00 (3 months) | £81.00 (1 month)

CO₂ Emissions: 155g/km – 180g/km

• 155g/km: £1,377.00 (12 months) | £344.00 (3 months) | £114.00 (1 month)

CO₂ Emissions: 185g/km – 220g/km

• 185g/km: £1,771.00 (12 months) | £442.00 (3 months) | £146.00 (1 month)

CO₂ Emissions: 225g/km or more

• 12 Month Period: £2,297.00