VAT Road Fuel Scale Charges affect many businesses that use vehicles for both work and personal journeys. With updated rates in May 2025, it is important to understand how the rules work and how the charges may impact your VAT position.
What are VAT Road Fuel Scale Charges?
VAT Road Fuel Scale Charges help businesses deal with VAT on fuel used for mixed purposes. Many businesses use the same car for business and personal travel. To simplify VAT reporting, HMRC allows a fixed charge instead of detailed mileage calculations.
Rather than tracking every private mile, businesses apply a standard charge. HMRC updates these charges each year. The charge estimates private fuel use and removes the need for complicated record-keeping. This keeps VAT reporting consistent and predictable.
The charges apply when a VAT-registered business pays for fuel that covers both business and private use. The amount depends on the vehicle’s CO2 emissions and also the length of the VAT accounting period. These periods usually run monthly, quarterly or annually.
What Changed from 1st May 2025?
HMRC has increased the VAT Road Fuel Scale Charges with effect from 1st May 2025. Businesses must use the new rates from the start of their next VAT accounting period that begins on or after this date.
For example: If your VAT quarter starts on 1st April 2025, you should continue using the old rates for that return. If your VAT quarter starts on 1st June 2025, you must use the new rates from that date.
The start date of your VAT period therefore matters. Using the incorrect rates can lead to errors and possible adjustments later.
Who Needs to Apply the VAT Road Fuel Scale Charges?
You should apply the VAT Road Fuel Scale Charge if all of the following apply:
- Your business is VAT-registered
- Your business pays for the fuel
- The vehicle is used for both business and private journeys
However, you do not need to apply the charge in certain situations:
- The fuel is used only for business travel
- You keep detailed mileage records and reclaim VAT on business use only
- The vehicle qualifies as a pool car with no private use
How the VAT Road Fuel Scale Charge Works
When you use the VAT Road Fuel Scale Charge method, you follow a straightforward process:
- Reclaim all VAT on fuel purchases as input tax
- Identify the correct scale charge for each vehicle
- Declare the charge as output VAT in Box 1 of your VAT Return
The scale charge acts as a fixed VAT adjustment. It replaces the need to calculate private mileage. You must apply this method to all relevant cars. You cannot mix different methods across vehicles within the same business.
Finding Your Vehicle’s CO2 Emissions
You can usually find the CO2 emissions figure in the vehicle logbook. If the logbook is unavailable, you can check the figure online using the vehicle registration number.
When using the emissions figure, you should:
- Round it down to the nearest multiple of five
- Use the combined figure if more than one figure appears
- Use the lowest figure if the vehicle runs on different fuels
If a vehicle has no CO2 figure due to its age, you should use the engine size instead:
| Up to 1,400cc | Treat as 140g/km |
| Between 1,401cc to 1,999cc | Treat as 175g/km |
| 2,000cc or more | Treat as 225g/km |
This method ensures older vehicles still fall into the correct emissions band.
VAT Road Fuel Scale Charges for 2025 to 2026
The new VAT Road Fuel Scale Charges apply from 1st May 2025 to 30th April 2026. The published figures include VAT and apply per vehicle and per driver.
For a car with CO2 emissions of 120g/km or less, the charges are:
- £661 for a 12-motth accounting period
- £164 for a 3-month accounting period
- £54 for a 1-month accounting period
For vehicles with higher emissions, the charge increases gradually. Cars with emissions of 225g/km or more attract a charge of:
- £2,314 annually
- £578 quarterly
- £192 monthly
Higher-emission vehicles therefore result in a higher VAT cost.
Annual, Quarterly and Monthly VAT Reporting
The VAT Road Fuel Scale Charge depends on how often you submit VAT Returns. You must always match the charge to your reporting period.
In practice:
- Annual VAT Returns use the 12-month figures
- Quarterly VAT Returns use the 3-month figures
- Monthly VAT Returns use the 1-month figures
Selecting the correct figure also helps prevent underpayments or overpayments of VAT.
Vans and Other Special Cases
Fuel provided for vans does not fall under the VAT Road Fuel Scale Charge rules. In many cases, businesses can reclaim VAT on van fuel in full. However, private use must remain minimal.
If private use becomes more than insignificant, you should restrict VAT recovery on a fair and reasonable basis. HMRC expects sensible estimates rather than exact calculations.
Contact Us
Do you have any questions about how the Budget 2025 may impact you? Our team is here to help. We are not just accountants; we are Chartered Accountants with one of the most reputable and premium accounting bodies. We are registered and regulated by ACCA; so you can rest assured that you are in good hands. Knowing this, don’t hesitate to get in touch with us if you require assistance: Pi Accountancy | Contact Us
This article is for general informational purposes only and does not constitute legal or financial advice. While we aim to keep our content up to date and accurate, UK tax laws and regulations are subject to change. Please speak to an accountant or tax professional for advice tailored to your individual circumstances. Pi Accountancy accepts no responsibility for any issues arising from reliance on the information provided.