From 1 May 2025, businesses using company cars will benefit from a 5.7% reduction in HMRC’s VAT road fuel scale charges. These charges account for the private use of fuel in business vehicles and must be applied on VAT returns from the start of the prescribed accounting period.
The updated rates will remain in place for 12 months, until 30 April 2026. HMRC confirmed the reduction was due to falling fuel prices during the revaluation.
The applied road fuel scale charge depends on the car’s CO₂ emissions and the length of the VAT accounting period (monthly, quarterly, or annually). For example, a vehicle emitting 225g/km or more will now attract a charge of £2,314, down from £2,454. Cars emitting 120g/km or less will be charged £661, compared to £702. A typical vehicle with 180g/km emissions will see the charge fall to £1,721 from £1,825.
These charges are flat rates, including VAT, and apply to one person for one specific vehicle during the relevant accounting period. It’s essential to calculate the charge accurately and not to switch between reporting methods.
Businesses must update their VAT returns to reflect these new charges from the beginning of their next accounting period starting on or after 1 May 2025.
The revised scale charges for different CO₂ bands are available in HMRC’s published table.
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