Motorists have been alerted to upcoming VAT road fuel charges effective from May 1, impacting businesses utilizing cars operationally.
This follows HMRC’s release of revised charges on April 16, offering businesses a brief two-week window to adapt.
The charges serve as a mechanism for businesses to account for private use of fuel in company vehicles, with less eco-friendly cars incurring higher costs.
The fixed rate values are designated per individual, relating to a specific vehicle, for the given accounting period, with these revised charges remaining effective until April 30, 2026.
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The revised charges will be in effect until April 30, 2026
For vehicles emitting 175 CO2, the annual charge dropped from £1,752 to £1,652. Even those with the highest emissions (225 or more) will see a decrease from £2,454 to £2,314 per year.
Monthly charges are similarly adjusted, with vehicles with lower emissions now incurring £54 in VAT instead of £58, while those with higher emissions are charged £192 instead of £203.
These reductions are uniform across all CO2 bands and accounting periods. For older vehicles without a CO2 emissions figure, drivers must use engine size to determine the appropriate band.
These classifications are designed to ensure all vehicles are properly sorted for VAT fuel charge calculations, regardless of their age.
The new rates represent a welcome decrease in costs compared to the 2024-25 period across all emissions bands.
According to tax firm Herbert Lewis Williams & Associates, the adjustments to the fuel scale rates continue to promote the use of cars with reduced CO2 emissions.
The firm explained: “The revaluation of fuel scale charges is no longer a part of the Budget process, and the tables are now published annually by HMRC.
“Where the CO2 emission figure is not a multiple of five, the figure is rounded down to the next multiple of five to determine the charge level. For bi-fuel vehicles that have two CO2 emissions figures, the lower of the two figures should be used. Special rules apply for cars which are too old to have a CO2 emissions figure.”
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HMRC announces new VAT charging rates annually for business vehicles
HMRC added: “You’ll need to calculate the correct road fuel charge, based on your vehicle’s CO2 emissions, and the duration of your VAT accounting period. This could be either one, three, or 12 months.”
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