- Reclaiming input VAT on all company car motoring requires paying an output flat rate for private driving.
- Charges depend on the vehicle CO2 emissions band and VAT accounting period length.
- The figures go in Box 1 and Box 6 of your VAT return.
HMRC VAT road fuel scale charges let UK businesses reclaim all input VAT on road fuel while paying a flat charge to cover private mileage. If a firm buys fuel for a car used for personal trips, it cannot keep all the tax. The flat mechanism adds output VAT back on your VAT return. Rates update each May. They depend on official vehicle emissions.
This guide explains how UK small-business owners and directors calculate these figures. It shows where they go on your return. It also helps you choose between flat charges and mileage logs. Picking the wrong option can cost hundreds of pounds in extra tax each quarter.
Statutory rules and CO2 emission bands
Under Schedule 2 of the VAT Order 2013 and VAT Notice 700/64, flat rates apply per car and per driver. The current schedule runs from 1 May 2026 to 30 April 2027. Businesses adopt the table at the start of their first return period beginning on or after 1 May 2026.
Each rate is set by the car's official CO2 rating in grams per kilometre. If the car rating is not a multiple of five, round it down to the next lower multiple of five. A car emitting 139 g/km uses the 135 band, not the 140 band.
Older cars without an official CO2 rating use engine size brackets instead. Engines up to 1,400cc use the 140 band. Engines between 1,401cc and 2,000cc use the 175 band. Engines over 2,000cc fall into the highest band of 225g/km or more.
Quarterly VAT fuel scale charges
Most UK small businesses file VAT quarterly. The official table sets out VAT-inclusive figures. The VAT fraction of one-sixth gives the tax owed.
Key quarterly rates from the official HMRC valuation table show the pattern across emission brackets.
| CO2 Emissions Band (g/km) | VAT-Inclusive Charge (£) | VAT Element in Box 1 (£) | Net Consideration in Box 6 (£) |
|---|---|---|---|
| 120 or less | £163.00 | £27.17 | £135.83 |
| 125 | £246.00 | £41.00 | £205.00 |
| 135 | £278.00 | £46.33 | £231.67 |
| 140 | £294.00 | £49.00 | £245.00 |
| 150 | £328.00 | £54.67 | £273.33 |
| 160 | £361.00 | £60.17 | £300.83 |
| 175 | £409.00 | £68.17 | £340.83 |
| 200 | £492.00 | £82.00 | £410.00 |
| 225 or more | £574.00 | £95.67 | £478.33 |
Monthly filers use the monthly values. A car emitting 120 g/km or less carries a monthly VAT-inclusive charge of £54.00 (£9.00 VAT element, £45.00 net). For an annual accounting period, the same car incurs a £657.00 VAT-inclusive charge (£109.50 VAT element, £547.50 net).
VAT fuel scale charge calculation
Calculating the flat rate takes three steps. First, find the car's CO2 rating. Next, check your return period length. Then apply the VAT fraction. Because the table is VAT-inclusive, calculate the VAT element using 20/120, which equals one-sixth:
VAT Due = Table Figure × (20 ÷ 120)Net Consideration = Table Figure − VAT DueWorked mathematical example: A company director drives a petrol car emitting 158 g/km. The company files quarterly VAT returns.
First, round down the emissions figure. 158 g/km rounds down to the 155 g/km band. In the statutory table, the three-month VAT-inclusive charge for band 155 is £344.00.
Next, extract the VAT element: £344.00 × (20 ÷ 120) = £57.33. The net consideration is £344.00 − £57.33 = £286.67. This £57.33 is output tax the company must pay back to HMRC for the quarter.
Fuel scale charge on VAT return
Many bookkeeping errors occur when posting these figures. Private motoring adjustments count as a deemed supply for personal journeys. That means they generate output VAT, not an input VAT cut.
Report the figures in two specific boxes on your VAT return:
- Box 1 (VAT due on sales and other outputs): Add the VAT element (£57.33 in our example). This adds to your total output tax bill.
- Box 6 (Total value of sales and all other outputs excluding VAT): Add the net consideration (£286.67 in our example). This increases your total reported turnover figure.
- Box 4 (VAT reclaimed on purchases and other inputs): Include the full input VAT on all fuel receipts purchased by the firm.
- Box 7 (Total value of purchases excluding VAT): Include the net cost of all fuel bought by the firm.
Do not net off the adjustment inside Box 4. HMRC compliance checks flag discrepancies when Box 1 and Box 6 entries do not match published vehicle valuation tables.
Can a business avoid a VAT road fuel scale charge
Yes. UK businesses have three choices under VAT Notice 700/64. The flat rate is an optional administrative shortcut, not a compulsory charge. Evaluate your company's actual driving profile against all three options.
| Option | Input VAT Reclaimed | Output VAT Paid | Record-Keeping Burden | Best Suited For |
|---|---|---|---|---|
| 1. Road Fuel Flat Charge | 100% of motoring VAT | Fixed quarterly flat rate (Box 1 and Box 6) | Low (keep purchase receipts only) | High business and high private mileage |
| 2. Business Mileage Only | VAT on business miles only (using Advisory Fuel Rates) | £0.00 | High (detailed trip-by-trip mileage logs required) | High business miles, low private miles |
| 3. Disallow All Motoring VAT | £0.00 (no input VAT claimed) | £0.00 | Zero (no mileage logs or flat rates needed) | Low business mileage or high-emission cars |
Option 2 needs a mileage log. For every trip, record the date, destination, purpose, and exact distance of each journey. You then calculate business fuel VAT using HMRC Advisory Fuel Rates. If your logs are incomplete, HMRC can reject the input VAT and assess arrears across past open periods.
Worked financial tipping-point comparison
The flat rate is only cost-effective when the input VAT reclaimed on private motoring exceeds the output VAT paid. If you do not buy enough petrol or diesel, using the flat rate actually loses money.
Worked financial analysis: Consider a company car in the 140 g/km band. The quarterly charge is £294.00, meaning you pay £49.00 in output VAT.
To break even on this £49.00 output charge, your business must reclaim at least £49.00 of input VAT on purely private motoring each quarter. At the standard 20% rate, £49.00 in VAT corresponds to £294.00 of petrol or diesel purchases (£245.00 net plus £49.00 VAT). If the vehicle's total motoring spend is only £200.00 per quarter, total VAT is £33.33. Reclaiming £33.33 in Box 4 while paying £49.00 in Box 1 produces a net loss of £15.67.
For low-mileage vehicles, Option 3 (disclaiming all motoring VAT) or Option 2 (mileage reimbursement) saves cash and eliminates compliance risk.
Commercial vans and fleet rules
These valuation rules apply to passenger cars. Commercial vehicles such as vans and pickup trucks operate under different rules in VAT Notice 700/64.
If an employee or director uses a genuine commercial van for incidental private travel (such as commuting between home and work), HMRC does not require a private motoring charge. The business can reclaim 100% of motoring input VAT provided private use remains strictly ordinary commuting or incidental. However, if a van is provided for regular, unrestricted private family use, the business must either account for private journeys or restrict input VAT claims.
HMRC enforces an all-or-nothing fleet rule. You cannot use flat rates on one company car and claim business-only miles on another car within the same business. You must apply the same method across all company cars, unless a specific vehicle has zero private use.
Record keeping and HMRC compliance
Maintaining solid audit trails protects your business during an HMRC VAT inspection. Keep purchase receipts showing VAT registration numbers for all motoring costs claimed in Box 4. Store vehicle V5C logbooks to verify official CO2 ratings. You must know how long to keep business records to meet statutory rules; HMRC requires VAT records to be retained for six years.
When tracking vehicle costs, integrate motoring charges into your regular small business expense approval policy and your one-hour budget plan. If your company also provides other perks, ensure you understand the boundaries for trivial benefit rules for directors and how vehicle benefits interact with wider corporation tax deductions.
Check the official GOV.UK VAT road fuel scale charges table and HMRC Notice 700/64 for statutory source material. This guide provides operational information for UK businesses and does not constitute formal tax advice. Review your vehicle VAT calculations with a qualified accountant.