Chancellor Rachel Reeves has confirmed new VAT road fuel scale charges for newer petrol and diesel cars, set to apply from May 1, 2026, until April 30, 2027. The changes, announced by HM Treasury, come amid speculation that Reeves may be replaced as Chancellor.
New VAT Charges Based on CO2 Emissions
HM Revenue and Customs (HMRC) has provided detailed guidance on how the new charges will work. Motorists must calculate the correct road fuel charge based on their car's CO2 emissions and the length of their VAT accounting period, which can be one, three, or 12 months. HMRC stated: “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.”
Drivers can check their car's CO2 emissions figure online if it is not available in their logbook. If the figure is not a multiple of five, it should be rounded down to the nearest multiple of five. HMRC added: “The CO2 emissions figure may also be specified, on either a UK approval certificate or corresponding certificate of conformity, issued by a manufacturer in another member state. You can use one of these certificates to work out the car’s CO2 emissions figure, for the purposes of the valuation table.”
Guidance for Older Cars
For cars first registered before March 1, 2001, the approved CO2 emissions figure is not shown on the registration certificate (V5C). HMRC explained: “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.”
In such cases, HMRC advises using engine size to determine the CO2 band: “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. More than 1,400cc but less than 2,000cc, use CO2 band 175. More than 2,000cc, use CO2 band 225 or more. 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.”
Detailed VAT Rate Tables
HMRC has published the new VAT road fuel scale charges for different CO2 emission levels. For cars with emissions of 120g/km or less, the 12-month charge is £657.00, the three-month charge is £163.00, and the one-month charge is £54.00. For emissions between 125g/km and 150g/km, charges range from £983.00 to £1,314.00 for 12 months, £246.00 to £328.00 for three months, and £81.00 to £109.00 for one month. For emissions from 155g/km to 180g/km, 12-month charges range from £1,377.00 to £1,708.00, three-month charges from £344.00 to £426.00, and one-month charges from £114.00 to £142.00. For emissions between 185g/km and 220g/km, 12-month charges range from £1,771.00 to £2,233.00, three-month charges from £442.00 to £557.00, and one-month charges from £146.00 to £185.00. For cars with emissions of 225g/km or more, the 12-month charge is £2,297.00, the three-month charge is £574.00, and the one-month charge is £190.00.
Impact on Motorists
These new rates will affect owners of newer petrol and diesel cars, increasing the cost of fuel benefit for company car users. The changes are part of ongoing adjustments to VAT rules and reflect the government's focus on emissions-based taxation. Motorists are advised to check their vehicle's CO2 emissions and calculate the appropriate charge for their accounting period to ensure compliance.
