Hmrc fuel charges 2026

New VAT rates for road fuel charges were introduced on May 1, 2026, significantly impacting thousands of drivers across the UK. The new rates will remain in effect until April 30, 2027.

For vehicles emitting less than 120g of CO2 per kilometre, the VAT-inclusive charge stands at £657 for a 12-month period. This charge increases in bands of 5g/km, reaching up to £2,297 for vehicles that emit 225g/km or more. Drivers will need to be aware of these changes as they calculate their business vehicle fuel consumption.

Key facts:

• Vehicles emitting less than 120g of CO2/km: £657 charge
• Vehicles emitting 225g/km or more: £2,297 charge
• CO2 emissions intervals increase by 5g/km

Drivers can recover VAT in full, not recover any VAT, or track their mileage to recover VAT partially. HMRC emphasizes that understanding how much of the accounting period is used for business versus personal mileage is crucial. “Drivers are being urged to familiarise themselves with new HMRC rates,” an official stated.

For vehicles without a specified CO2 emissions figure, the band is determined by engine size. Vehicles with engines of 1,400cc or less fall under the 140g/km band, while those between 1,400cc and 2,000cc fall under the 175g/km band.

What to consider:

• Engines of 1,400cc or less: classified under the 140g/km band
• Engines between 1,400cc and 2,000cc: classified under the 175g/km band
• Annual updates from HMRC on VAT rates for road fuel charges

The implementation of these new VAT rates reflects ongoing efforts to align fuel pricing with environmental considerations. As CO2 emissions continue to be a key factor in determining vehicle taxes and charges, observers expect further adjustments in future fiscal policies aimed at reducing overall emissions.