10 min read
If you drive for a living, you already know fuel isn’t cheap. Whether you’re a delivery driver, taxi driver, driving instructor or a small business owner clocking up serious miles, what you pay at the pump hits your bottom line directly.
What’s less obvious is how the tax side of fuel works, and what to do about it on your VAT return or Self Assessment. Let’s go through it.
What is fuel duty?
Fuel duty is a government tax on petrol and diesel. It’s folded into the price per litre at the forecourt, so it’s not something you see broken out on a receipt. You’re paying it every single time you fill up, whether you realise it or not.
The current rate is 52.95p per litre. On top of that, VAT at 20% is charged on the full pump price, duty included. So there’s tax on the duty itself. At a typical forecourt price, tax makes up well over half of what you’re paying.
The fuel duty freeze in 2026
The government hasn’t changed the fuel duty rate since March 2022, and the 5p per litre reduction remains in place. For a driver covering high mileage, that matters.
However, the Treasury has confirmed plans to remove the 5p cut from January 2027. The current rate won’t last, so if you’re forecasting business costs, factor in rising fuel prices from 2027. We won’t know the new rate until the 2026 Autumn budget.
What are VAT road fuel scale charges?
If you’re VAT-registered and your business pays for fuel, you’ll need to understand road fuel scale charges. They come up a lot, and they catch people out.
The way most businesses handle this is through the road fuel scale charge. Instead of logging every journey in detail to separate private from business miles, you pay a fixed charge on your VAT return as output tax. You still reclaim all the input VAT on your fuel, but the scale charge offsets the private use portion. The amount is set by HMRC and is based on your vehicle’s CO2 emissions.
It’s a practical system. Less admin than a detailed mileage log, and it keeps you compliant.
Who does it apply to?
The VAT road fuel scale charges for 1 May 2026 to 30 April 2027
HMRC has updated the VAT road fuel scale charges from 1 May 2026. These rates apply until 30 April 2027 and are used to account for private fuel use in business vehicles. The charge depends on your vehicle’s CO2 emissions and your VAT accounting period.
You can find your vehicle’s CO2 emissions figure on the V5C registration certificate. If the figure is not a multiple of five, round it down to the nearest multiple of five.
Annual accounting period
| CO2 emissions (g/km) | VAT inclusive charge (£) | VAT element (£) |
| 120 or less | 657.00 | 109.50 |
| 130 | 1,051.00 | 175.17 |
| 140 | 1,182.00 | 197.00 |
| 155 | 1,377.00 | 229.50 |
| 170 | 1,576.00 | 262.67 |
| 185 | 1,771.00 | 295.17 |
| 200 | 1,971.00 | 328.50 |
| 225 or more | 2,297.00 | 382.83 |
Quarterly accounting period
| CO2 emissions (g/km) | VAT inclusive charge (£) | VAT element (£) |
| 120 or less | 163.00 | 27.17 |
| 130 | 261.00 | 43.50 |
| 140 | 294.00 | 49.00 |
| 155 | 344.00 | 57.33 |
| 170 | 393.00 | 65.50 |
| 185 | 442.00 | 73.67 |
| 200 | 492.00 | 82.00 |
| 225 or more | 574.00 | 95.67 |
Monthly accounting period
| CO2 emissions (g/km) | VAT inclusive charge (£) | VAT element (£) |
| 120 or less | 54.00 | 9.00 |
| 130 | 86.00 | 14.33 |
| 140 | 98.00 | 16.33 |
| 155 | 114.00 | 19.00 |
| 170 | 130.00 | 21.67 |
| 185 | 146.00 | 24.33 |
| 200 | 163.00 | 27.17 |
| 225 or more | 190.00 | 31.67 |
The VAT element in each case is one-sixth of the total charge. The full table covering every CO2 band is on GOV.UK: VAT road fuel scale charges from 1 May 2026 to 30 April 2027.
What if your car doesn't have a CO2 figure?
- 1,400cc or under: use the 140 g/km band
- Over 1,400cc up to 2,000cc: use the 175 g/km band
- Over 2,000cc: use the 225 g/km or more band
Do you have to use the scale charge?
Reclaim only the business VAT. Keep a log of every journey and claim only the VAT on fuel used for work. More accurate, but it takes consistent effort year-round.
Don’t reclaim any fuel VAT. No claim, no scale charge. The right call if your business mileage is low and the VAT isn’t worth the effort.
For most drivers with mixed-use vehicles, the scale charge is the most practical choice.
A few questions we often get asked
1. Does the scale charge apply to electric vehicles?
No. Electricity isn’t classified as a road fuel for VAT purposes, so EV charging is handled differently. If you drive an electric company car, speak to your accountant about how to treat charging costs on your return.
2. What if I use more than one vehicle?
Each vehicle is treated separately. You apply the scale charge for each car based on its own CO2 band.
3. Can I switch between scale charges and mileage records depending on the period?
Self-employed drivers: don't forget fuel on your Self Assessment
If you’re not VAT-registered but you drive for work, fuel is still a deductible expense on your Self Assessment return. You’ve got two ways to claim it.
The actual cost method means you record and claim the real cost of fuel for business journeys. The approved mileage rate lets you claim 55p per mile for the first 10,000 business miles in a tax year, and 25p per mile after that. The mileage rate covers fuel, wear and tear and other running costs, so it’s usually the simpler option for sole traders who don’t want to track every receipt.
Getting it right matters
We regularly see drivers who aren’t applying the scale charge correctly, either claiming fuel VAT without running the charge, or missing legitimate reclaims entirely. Both create problems if your returns are ever reviewed by HMRC.
If you’d like a second pair of eyes on how you’re handling fuel on your VAT returns or Self Assessment, we’re happy to help. Get in touch with us today!
Anthony Burrell is the Tax Director at Golding Accountancy, specialising in UK personal tax, compliance, and strategic tax planning. He works with business owners, landlords, and property investors across the UK, helping them navigate complex tax legislation while ensuring they remain compliant and tax-efficient. Outside the office, Anthony is a dedicated West Ham supporter and has been a season ticket holder for more than 40 years. He also recommends Dext to clients looking to simplify their bookkeeping and financial processes.
