New VAT rates for road fuel charges were introduced by HMRC on May 1, 2026. These changes will significantly impact thousands of drivers across the UK.
Vehicles emitting less than 120g of CO2 per kilometre now face a VAT-inclusive charge of £657 for a 12-month period. This charge increases in bands of 5g/km, reaching up to £2,297 for vehicles emitting 225g/km or more.
Drivers have several options regarding VAT recovery. They can recover VAT in full, not recover any VAT, or track the split between business and personal mileage to recover VAT partially. HMRC emphasizes that drivers should carefully record their usage.
Key details:
- HMRC updates VAT rates annually, affecting business vehicle fuel consumption.
- For vehicles without a CO2 emissions figure, the CO2 band is determined by engine size.
- Engines of 1,400cc or less fall under the 140g/km band, while those above 1,400cc but under 2,000cc fall under the 175g/km band.
Officials are urging drivers to familiarize themselves with these new rates. These changes could have wide-ranging effects on fuel pricing and driver expenses.
The new VAT fuel rates will remain in place until April 30, 2027. Observers expect further updates on how these changes will influence CO2 emissions and overall driving costs in the coming months.