From 1 May 2025, VAT road fuel scale charge rates increased, impacting VAT-registered businesses that reclaim VAT on fuel used for both business and private journeys. If your business claims VAT on motoring expenses, especially fuel, this update is essential for maintaining compliance and optimising your VAT recovery.
What’s changing?
The new rates apply from the start of your next VAT accounting period beginning on or after 1 May 2025. View the updated rates on GOV.UK
What is the VAT road fuel scale charge?
The fuel scale charge is a flat-rate tax that accounts for private fuel use in business vehicles. It allows full VAT recovery on fuel purchases without tracking mileage.
It’s based on:
- The vehicle’s CO₂ emissions
- Your VAT accounting period (whether that’s monthly, quarterly, or annually)
VAT recovery options for fuel
You can choose to:
- Reclaim all VAT and apply the fuel scale charge
- Reclaim no VAT and avoid the charge
- Keep mileage logs and reclaim only the business-use proportion
However, if you use the scale charge method, it must be applied consistently across all cars used for both business and private purposes.
Exceptions
- Pool cars, with no private use, are exempt from the scale charge
- Vans are not subject to the charge, and VAT is usually fully recoverable—unless private use is more than minimal, in which case VAT must be apportioned
Next steps
- Identify your VAT accounting periods and apply the new rates accordingly
- Update your accounting systems to reflect the changes
- Review your recovery method to ensure it’s still cost-effective
- Contact our team of VAT experts for tailored guidance on the best approach for your business.
To arrange a discussion, get in touch by contacting Andy Kirkaldy (manager – corporate and indirect taxes) by clicking the button below.
