Vehicles emitting less than 120g of CO2 per kilometre will incur a VAT-inclusive charge of £657 for a 12-month period. In contrast, vehicles emitting 225g/km or more will face a charge of £2,297 — that is more than three times the charge for lower-emission vehicles.

The new rates increase in bands of 5g/km, which affects how businesses account for their vehicle fuel consumption. Drivers can choose to recover VAT in full, not recover any VAT at all, or track the split between business and personal mileage to recover VAT partially.

Key details:

• HMRC updates VAT rates for road fuel charges annually.
• For vehicles without a CO2 emissions figure, the CO2 band is determined by engine size.
• Engines of 1,400cc or less fall under the 140g/km band.
• Engines above 1,400cc but under 2,000cc fall under the 175g/km band.

The changes in VAT rates are critical for many drivers. “Drivers are being urged to familiarise themselves with new HMRC rates,” an official stated. This awareness is essential as these adjustments could have significant financial implications.

The next annual update from HMRC will provide further clarity on any potential changes beyond April 2027. Observers expect that ongoing discussions about environmental policies may influence future adjustments to these rates.

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