HMRC confirms new VAT charges for drivers with older vehicles from Might 1

The brand new costs for petrol and diesel drivers will likely be in impact till April 30, 2027.

Refueling at a modern gas station with green fuel pumps and a customer filling their vehicle in a well-lit, organized space during daytime

The brand new VAT street gas scale costs will likely be in place till April 30, 2027 (Picture: Getty)

HM Income and Customs (HMRC) has confirmed new VAT charges for petrol and diesel drivers with older vehicles throughout the UK.

The brand new VAT street gas scale costs got here into impact on Might 1, 2026, and can stay in place till April 30, 2027, with the modifications anticipated to impression hundreds of drivers. Highway gas scale costs are a hard and fast quantity accepted by HMRC that’s added to a VAT return to account for the non-public consumption of gas in a enterprise car. These costs apply to automobiles primarily based on CO2 emissions, and HMRC updates the charges yearly.

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The costs are accounted for by together with them in Field 1 of your VAT return and are fastened quantities no matter the quantity of personal mileage you clock up.

HMRC mentioned drivers might want to work out the right street gas cost primarily based on their automotive’s CO2 emissions, and the size of their VAT accounting interval, which will likely be both one, three or 12 months.

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The charges improve in bands of 5g per kilometre of CO2 emissions, with VAT-inclusive costs starting from £657 for automobiles emitting 120g or much less of CO2 per km, to £2,297 for automobiles emitting 225g/km for a 12-month interval. Drivers can account for the costs on an annual, quarterly or month-to-month foundation.
However for drivers of older vehicles that don’t have a CO2 emissions determine, you’ll must determine the CO2 band primarily based in your automotive’s engine measurement as an alternative to work out the cost.
In response to ETA Insurance coverage, it will usually apply to drivers with vehicles registered earlier than 2001. The insurance coverage agency mentioned: “Motorists who drive vehicles that have been first registered earlier than 2001 are unlikely to concentrate on how a lot CO2 their car emits.
“A automotive’s V5 doc (typically known as the logbook) particulars the quantity of CO2 the car emits per kilometre, however this isn’t the case for automobiles registered earlier than 1st March 2001.”
Explaining methods to work out the CO2 emissions determine for older vehicles, HMRC mentioned: “In case your automotive is just too outdated to have a CO2 emissions determine, you must determine the CO2 band primarily based on its engine measurement. If its cylinder capability is:
- 1,400 or much less, use CO2 band 140
greater than 1,400cc however lower than 2,000cc, use CO2 band 175
greater than 2,000 cc, use CO2 band 225 or extra

“To do that, work out how a lot of the accounting interval you used every automotive for, and document this as a proportion of the accounting interval. Apply this proportion to every street gas scale cost to get a complete determine.”

Drivers can recuperate the VAT in full and pay the street gas scale cost, recuperate no VAT in any respect, or observe the break up between enterprise and private mileage to partially recuperate some VAT.

Listed are the brand new VAT street gas scale costs from Might 1, 2026, to April 30, 2027, for a 12 month, three month and one month accounting interval, as confirmed by HMRC: