Experts have called on motorists to ensure they are prepared for new VAT charges from HMRC that launched at the start of the month.
On May 1, HM Revenue and Customs introduced the latest VAT road fuel scale charges for business vehicles, including annual, quarterly and monthly rates.
The rates can be used to add to a VAT return to account for the private use of fuel when driving a business vehicle.
The new rates introduced earlier this month will apply to drivers and businesses for the next 12 months, when HMRC will update rates again.
Hugh Acland, chief commercial officer at Capital on Tap, urged small businesses in particular to review how they’re handling fuel costs.
He said: “There are a few different ways to treat VAT on fuel, but many businesses default to reclaiming it in full and applying the scale charge without checking if it’s actually the most cost-effective option.
“The reality is that the scale charge is a flat rate based on emissions, not actual usage, so if private mileage is low, it can mean paying more VAT than necessary.
“In some cases, a simpler mileage-based approach, or only reclaiming VAT on business use, can work out better.”
Small businesses are being urged to ensure they are confident in choosing the right VAT charge for them
|
GETTY
He urged small businesses to remember that once the scale charge is introduced, it must be consistent across all vehicles, with Mr Acland saying this makes it “even more important to get the decision right”.
The expert emphasised that making the correct choice could help drivers reduce “unnecessary” costs and avoid “overpaying over the long term”.
GB News has compiled the latest VAT road fuel scale charges from May 1, 2026, to April 30, 2027.
The new VAT fuel rates will be in place until April 30, 2027
|
GETTYVAT road fuel scale charges for annual charges (2026-2027)
120g of CO2 per km or less – £657
125g/km – £983
130g/km – £1,051
135g/km – £1,114
140g/km – £1,182
145g/km – £1,245
150g/km – £1,314
155g/km – £1,377
160g/km – £1,445
165g/km – £1,508
The maximum annual VAT rate for 2026/2027 is £2,297
|
PA170g/km – £1,576
175g/km – £1,640
180g/km – £1,708
185g/km – £1,771
190g/km – £1,839
195g/km – £1,902
200g/km – £1,971
205g/km – £2,034
210g/km – £2,102
215g/km – £2,165
220g/km – £2,233
225g/km or more – £2,297