Understanding the Basics and Latest Figures (2024-2025)
What Are HMRC Fuel Scale Charges?
If you run a business in the UK and use company vehicles for both business and private purposes, you may already be familiar with fuel scale charges. These charges are used to calculate the VAT owed on fuel used for private mileage, ensuring that businesses do not claim VAT relief on personal fuel consumption.
Instead of keeping detailed mileage logs to separate business and personal fuel usage, HMRC provides standardized rates based on CO2 emissions. These rates help businesses simplify their VAT calculations by paying a fixed fuel scale charge rather than manually tracking every private journey.
Latest HMRC Fuel Scale Charges (May 2024 – April 2025)
The HMRC fuel scale charge tables are updated annually and are based on the CO2 emissions of the vehicle. The latest VAT fuel scale charges, applicable from 1 May 2024 to 30 April 2025, can be accessed directly from the UK government’s official site.
Below is a summary of the latest figures for VAT road fuel scale charges (2024-2025), categorized by CO2 emissions:
Table: VAT Fuel Scale Charges for Cars (May 2024 – April 2025)
CO2 Emissions (g/km) | 1-Month Charge (£) | 3-Month Charge (£) | Annual Charge (£) |
0 - 120 | 23 | 69 | 276 |
121 - 140 | 34 | 102 | 408 |
141 - 160 | 46 | 138 | 552 |
161 - 180 | 59 | 177 | 708 |
181 - 200 | 72 | 216 | 864 |
201 - 225 | 87 | 261 | 1,044 |
226 - 255 | 103 | 309 | 1,236 |
Over 255 | 118 | 354 | 1,416 |
Understanding These Figures
The figures above represent the VAT-inclusive fuel scale charges.
They apply only to cars (not vans, motorcycles, or other commercial vehicles).
If your business fully reclaims VAT on fuel, you must apply these charges to account for private fuel use.
The CO2 emissions figure is found on the vehicle’s V5C logbook.
Why Are Fuel Scale Charges Important for Businesses?
Many businesses reclaim VAT on fuel expenses, but if any private use occurs, the business must pay back a portion of the VAT using the fuel scale charge system.
Key Benefits of Using Fuel Scale Charges
✅ Simplicity – No need to maintain detailed mileage logs for every business trip.
✅ Standardized VAT Calculation – Provides a clear, predefined VAT amount rather than complex calculations..
✅ Compliance – Helps businesses avoid incorrect VAT claims, reducing the risk of penalties from HMRC.
Who Needs to Pay Fuel Scale Charges?
The fuel scale charge system applies to businesses that:
Own or lease a car that is used for both business and personal trips.
Reclaim VAT on fuel expenses but do not separate business and personal fuel usage.
Want to avoid keeping extensive mileage records and prefer using a standard VAT adjustment.
⚠️ Important Note: If a business does not reclaim VAT on fuel at all, then fuel scale charges do not apply.
How to Calculate and Report Fuel Scale Charges
Businesses must include fuel scale charges in their VAT Return (Box 1 – Output VAT). Here's a step-by-step process:
Step-by-Step Calculation
1️⃣ Determine your car’s CO2 emissions (found on the V5C logbook).
2️⃣ Find the corresponding fuel scale charge in the latest VAT tables (as shown above).
3️⃣ Include the amount in your VAT return under Box 1 (VAT Due on Sales and Other Outputs).
4️⃣ The charge is not an actual cash expense but an adjustment in VAT calculations.
Example:
A business owner drives a company car emitting 160g/km CO2.
Based on the 2024-2025 VAT fuel scale charge table, the annual VAT fuel charge is £552.
This amount must be included in Box 1 of the VAT return.
🔹 How This Works:
User selects their vehicle's CO2 emissions from a dropdown.
User selects the VAT reporting period (Monthly, Quarterly, or Annually).
Clicking "Calculate Fuel Scale Charge" runs the JavaScript function to compute the charge.
The calculated charge is displayed dynamically.
Common Misconceptions About Fuel Scale Charges
Despite being a standard VAT adjustment, many businesses misunderstand fuel scale charges. Here are some of the most common misconceptions:
❌ “Fuel Scale Charges Are an Additional Tax”
✅ No, they are not an extra tax but a method to adjust VAT reclaims based on private fuel usage.
❌ “You Must Keep Detailed Logs Even If Using Fuel Scale Charges”
✅ No, detailed mileage records are NOT needed if you apply fuel scale charges.
❌ “They Apply to All Vehicles”
✅ No, fuel scale charges only apply to company cars – not vans, motorcycles, or other commercial vehicles.
Key Takeaways:
Fuel Scale Charges ensure VAT compliance for businesses that reclaim fuel VAT while using company cars for private journeys.
The latest charges for 2024-2025 depend on the CO2 emissions of the vehicle.
Businesses can use fuel scale charges instead of keeping detailed mileage logs.
Fuel scale charges must be reported in VAT Returns (Box 1 - Output VAT).
Advanced Insights, Calculations, and VAT Implications
How to Accurately Calculate Fuel Scale Charges for Your Business
One of the biggest advantages of fuel scale charges is that they simplify VAT calculations for businesses. However, many business owners still struggle with the exact calculations, especially when reporting quarterly VAT returns.
Step-by-Step Calculation for Fuel Scale Charges in Different Scenarios
Let's break it down with a real-world example to show how a business should calculate and report fuel scale charges on their VAT return.
Scenario 1: Sole Trader Using a Company Car
Imagine you’re a self-employed IT consultant who owns a limited company. You drive a company car with CO2 emissions of 145g/km. Your business reclaims VAT on all fuel purchases, but you also use the car for personal trips.
Here’s how you calculate the fuel scale charge for VAT:
1️⃣ Check your CO2 emissions: Your car emits 145g/km of CO2.,
2️⃣ Look up the latest VAT charge: Based on the 2024-2025 fuel scale charge table, the monthly VAT charge for a 141-160g/km car is £46.
3️⃣ Adjust for VAT periods:
If you file quarterly VAT returns, you need to use the 3-month figure, which is £138.
If you file annually, you need to use the 12-month figure, which is £552.
4️⃣ Report the charge in your VAT return:
Add £138 to Box 1 (VAT due on sales and other outputs) of your VAT return.
💡 Important: Even though you’re not physically paying this amount, it’s a VAT adjustment to ensure you’re not overclaiming VAT on private fuel use.
Quarterly vs. Annual VAT Reporting – How Fuel Scale Charges Differ
Many businesses report VAT quarterly, while others opt for annual accounting. This directly impacts how fuel scale charges are applied.
Quarterly VAT Reporting
Most VAT-registered businesses file VAT every 3 months.
You must use the 3-month fuel scale charge amount.
Example: A business using a 121-140g/km CO2 car will report £102 every quarter.
Annual VAT Reporting
Businesses on Annual Accounting VAT schemes file once per year.
You must use the full 12-month fuel scale charge amount.
Example: A business using a 121-140g/km CO2 car will report £408 per year.
💡 Tip: If you’re a small business, consider whether quarterly or annual VAT filing works best for you. Quarterly filing helps spread the cost, while annual filing simplifies paperwork.
Special Cases: What If Your Business Uses Multiple Vehicles?
Not all businesses use just one car. Some companies own multiple cars, while others lease cars for employees. Here’s how to handle different cases:
Scenario 2: A Business with Multiple Company Cars
Let's say you run a consulting firm with five employees, and each has a company car with different CO2 emissions.
Employee | Car Model | CO2 Emissions (g/km) | Quarterly VAT Charge (£) |
John | BMW 3 Series | 140 | 102 |
Sarah | Audi A4 | 165 | 138 |
Alex | Ford Focus | 120 | 69 |
Emma | Tesla Model 3 | 0 | 0 |
David | Mercedes E-Class | 180 | 177 |
💡 Key Takeaways:
Each company car’s VAT charge must be calculated separately.
Electric cars (like the Tesla Model 3) have a CO2 rating of 0, so they are exempt from fuel scale charges.
The total VAT adjustment for this business in one quarterly VAT return would be £486 (£102 + £138 + £69 + £177).
Fuel Scale Charges for Leased Cars – Are They Different?
Many businesses lease company cars rather than own them outright. The rules for VAT and fuel scale charges on leased vehicles are slightly different.
Scenario 3: A Business Leasing a Company Car
A marketing agency leases a Volkswagen Passat for one of its directors. The car has CO2 emissions of 175g/km, and the company fully reclaims VAT on fuel expenses.
Does the business need to apply fuel scale charges?
✅ Yes – If the business reclaims VAT on fuel, it must apply fuel scale charges.
🚫 No – If the business does NOT reclaim VAT on fuel, then fuel scale charges are not required.
💡 Tip: If your business leases cars but does not reclaim VAT on fuel, you can ignore fuel scale charges entirely.
Common Pitfalls and Mistakes to Avoid
Even experienced business owners make mistakes when handling fuel scale charges. Here are the most common errors to watch out for:
❌ 1. Claiming Full VAT on Fuel but Forgetting to Apply Fuel Scale Charges
✅ Solution: If you reclaim 100% VAT on fuel, you must also include the VAT fuel scale charge in Box 1 of your VAT return.
❌ 2. Applying Fuel Scale Charges to Vans or Motorcycles
✅ Solution: Fuel scale charges only apply to cars. Vans, motorcycles, and lorries are exempt.
❌ 3. Using the Wrong CO2 Emission Figures
✅ Solution: Always use the official CO2 emissions figure from your V5C logbook or HMRC’s CO2 calculator.
❌ 4. Not Adjusting for Hybrid or Dual-Fuel Vehicles
✅ Solution: If your vehicle is hybrid or dual-fuel, use the lower CO2 figure provided on the logbook.
Key Takeaways
✅ Fuel scale charges vary based on CO2 emissions and VAT reporting periods (quarterly vs. annual).
✅ Multiple company cars require separate calculations, and electric cars are exempt.
✅ Leased cars require fuel scale charges ONLY if the business reclaims VAT on fuel.
✅ Avoid common mistakes such as forgetting to report charges or using the wrong CO2 figures.
Tax Planning Strategies, Alternatives, and Expert Tips
Can You Avoid HMRC Fuel Scale Charges? (Legally, of Course!)
Many business owners dislike fuel scale charges because they add to VAT costs without providing a direct benefit. However, there are legal ways to reduce or avoid these charges.
Let’s explore some smart alternatives that businesses can consider.
Option 1: Do Not Reclaim VAT on Fuel at All
One of the simplest ways to avoid fuel scale charges is to stop reclaiming VAT on fuel altogether.
🚫 No VAT reclaimed = No fuel scale charge required.
However, this option is only suitable if:
✅ Your company car is mostly used for private travel.
✅ You don’t drive high business mileage, making VAT reclaims less beneficial.
💡 Example:
A self-employed consultant drives only 1,500 business miles per year.
The total VAT reclaim on fuel would be £200 annually, but the fuel scale charge is £408.
The consultant chooses NOT to reclaim VAT on fuel, saving £208 overall.
Best For: Sole traders, directors with personal use of company cars, and businesses with low mileage.
Option 2: Use a Mileage Allowance Instead of Reclaiming VAT on Fuel
Many businesses avoid fuel VAT complexity by using HMRC-approved mileage rates instead.
🚀 How It Works:
Instead of reclaiming VAT on fuel, employees pay for their own fuel.
The company reimburses them based on HMRC’s Approved Mileage Allowance Payments (AMAPs).
There’s no VAT to reclaim, and therefore, no fuel scale charge applies.
✅ HMRC Mileage Rates (2024-2025):
Vehicle Type | First 10,000 Miles | Over 10,000 Miles |
Cars & Vans | 45p per mile | 25p per mile |
Motorcycles | 24p per mile | 24p per mile |
Bicycles | 20p per mile | 20p per mile |
💡 Example:
A sales director drives 8,000 business miles per year in a company car.
Instead of reclaiming VAT on fuel, the company pays mileage at 45p per mile.
The total reimbursement is 8,000 x 45p = £3,600.
No VAT charge applies, and record-keeping is simplified.
Best For: Businesses with high mileage employees who use their own cars or company cars but prefer fixed-rate reimbursements.
Option 3: Use Electric Vehicles (EVs) – Zero Fuel Scale Charge!
🚀 Biggest VAT-saving hack: Switch to electric vehicles (EVs) for company cars.
⚡ Why?
EVs have zero CO2 emissions, meaning no fuel scale charges apply.
The VAT on electricity used for business charging can still be reclaimed.
Government incentives, such as lower Benefit in Kind (BiK) tax, make EVs even more attractive.
💡 Example:
A company director switches from a petrol BMW (CO2: 165g/km) to a Tesla Model 3 (CO2: 0g/km).
The previous fuel scale charge was £552 per year.
By switching to an EV, the VAT charge drops to £0, saving the company hundreds annually.
🚗 Best EVs for Company Cars (2024-2025):
Tesla Model 3
Polestar 2
BMW i4
Mercedes EQE
Kia EV6
Best For: Companies looking for long-term VAT savings, tax reliefs, and eco-friendly incentives.
Fuel Scale Charges and Company Car Tax: Are You Paying Too Much?
If your business provides company cars, it’s crucial to consider the full tax impact, not just VAT.
The Hidden Cost: Benefit in Kind (BiK) Tax
What’s BiK Tax?
If an employee uses a company car for personal trips, it’s treated as a taxable benefit.
The higher the CO2 emissions, the higher the BiK tax the employee pays.
How BiK Tax and Fuel Scale Charges Work Together
Factor | High-CO2 Car (e.g., Diesel SUV) | Low-CO2 Car (Hybrid/EV) |
Fuel Scale Charge | £1,236 per year | £0 - £276 per year |
BiK Tax | 40% of £30,000 (approx. £12,000 per year) | 2% of £30,000 (approx. £600 per year) |
Total Cost to Employee | £13,236 per year | £600 per year |
💡 Lesson: High CO2 cars result in higher VAT charges AND higher personal tax liabilities.
🚀 Strategy: Opt for low-CO2 or electric vehicles to cut both VAT and BiK tax bills.
Record-Keeping and Compliance: Avoiding VAT Penalties
One of the biggest risks with fuel scale charges is incorrect VAT reporting, which can trigger HMRC audits and penalties.
5 Simple Ways to Stay Compliant
✅ 1. Keep a Digital Copy of Your Fuel VAT Reclaims – Use accounting software (like QuickBooks, Xero, or Sage) to track VAT on fuel.
✅ 2. Cross-Check CO2 Emission Figures – Always refer to the V5C logbook or HMRC’s CO2 database to ensure accuracy.
✅ 3. Include the Right VAT Amount in Your Returns – Make sure you report the correct fuel scale charge in Box 1 of your VAT return.
✅ 4. Conduct an Annual Review – If your business fuel use changes, reassess whether fuel scale charges are still cost-effective.
✅ 5. Consider an HMRC Compliance Check – If uncertain, seek professional tax advice to ensure you’re handling fuel VAT correctly.
Key Takeaways
✅ Avoid fuel scale charges by NOT reclaiming VAT on fuel or switching to mileage allowances.
✅ Electric vehicles (EVs) offer huge VAT savings, as they are exempt from fuel scale charges.
✅ Company car tax (BiK) and fuel scale charges go hand-in-hand—lower CO2 = lower tax.
✅ Accurate VAT reporting and record-keeping can prevent costly HMRC penalties.
Making Fuel VAT Work for Your Business
HMRC fuel scale charges aren’t optional, but they can be minimized with smart tax planning. Businesses should carefully weigh the benefits of VAT reclaims vs. fuel scale charges and consider more tax-efficient options, such as electric cars or mileage allowances.
What Should You Do Next?
🚀 Review your company car fuel VAT strategy.
🚗 Consider switching to a mileage-based system or EVs.
📊 Ensure accurate VAT reporting to avoid penalties.
By applying these strategies, you can legally reduce VAT liabilities, simplify accounting, and keep more money in your business.
FAQs
Q1. Can you apply fuel scale charges to motorcycles or vans?
A. No, fuel scale charges apply only to company cars. Motorcycles, vans, and commercial vehicles are not subject to fuel scale charges, even if VAT is reclaimed on their fuel.
Q2. How do fuel scale charges apply to plug-in hybrid vehicles (PHEVs)?
A. Plug-in hybrid vehicles (PHEVs) are treated the same as petrol or diesel cars for fuel scale charges. You must use the lower CO2 emissions value from the logbook to determine the correct charge.
Q3. If you only use a company car occasionally for private trips, do you still need to apply fuel scale charges?
A. Yes, fuel scale charges apply regardless of how often the car is used privately. There is no pro-rata adjustment for occasional private use.
Q4. Can you adjust fuel scale charges if you only use a company car for part of the year?
A. Yes, you can prorate the charge if the company car is only available for a portion of the year. HMRC allows businesses to calculate a proportional charge based on how many months the car was available.
Q5. Can you reclaim VAT on fuel for personal use if you pay fuel scale charges?
A. No, fuel scale charges are designed to account for VAT on private fuel use, so you cannot reclaim VAT on personal fuel expenses separately.
Q6. What happens if a business forgets to include fuel scale charges in its VAT return?
A. If you fail to report fuel scale charges, HMRC may issue penalties or require adjustments in your next VAT return. Regular compliance checks can help avoid fines.
Q7. Are fuel scale charges different in Scotland, Wales, or Northern Ireland?
A. No, HMRC fuel scale charges apply uniformly across the UK, including Scotland, Wales, and Northern Ireland.
Q8. Can a business negotiate or reduce its fuel scale charge with HMRC?
A. No, fuel scale charges are fixed amounts set by HMRC based on CO2 emissions. Businesses cannot negotiate lower rates but can explore alternatives such as mileage allowances or electric vehicles.
Q9. Does reclaiming VAT on fuel for a pool car require fuel scale charges?
A. No, if a company car is classified as a pool car (i.e., shared by employees and not used for private trips), fuel scale charges do not apply. However, strict conditions must be met to qualify as a pool car.
Q10. If an employee contributes to private fuel costs, do fuel scale charges still apply?
A. If an employee fully reimburses the company for private fuel, fuel scale charges may not be required. However, proper records must be maintained to prove full reimbursement.
Q11. Do fuel scale charges apply to second-hand company cars?
A. Yes, fuel scale charges apply regardless of whether the car is new or used. The charge is based on the car's CO2 emissions, not its purchase date.
Q12. Can businesses use different VAT accounting methods to reduce fuel scale charges?
A. No, the fuel scale charge system is fixed and applies to all VAT-registered businesses that reclaim VAT on fuel. However, switching to mileage allowances could be an alternative.
Q13. What records should businesses keep to support their fuel scale charge calculations?
A. Businesses should keep records of CO2 emissions (V5C logbook), VAT returns, fuel purchase receipts, and company car usage policies to support compliance.
Q14. Are VAT fuel scale charges affected by the annual budget or tax changes?
A. Yes, HMRC updates fuel scale charge tables annually, usually in line with the government’s budget announcements. New charges are published every April or May.
Q15. Can self-employed individuals apply fuel scale charges?
A. No, fuel scale charges apply only to VAT-registered businesses with company cars. Self-employed individuals can use mileage allowances instead.
Q16. Do fuel scale charges apply if a business uses fuel cards?
A. Yes, if a business reclaims VAT on fuel purchases made with fuel cards, fuel scale charges still apply for private fuel use.
Q17. Are fuel scale charges applicable for dual-fuel (LPG or CNG) vehicles?
A. Yes, for dual-fuel cars, use the lower CO2 emissions figure (usually available on the V5C logbook) to determine the correct charge.
Q18. Can an employee opt out of fuel scale charges if they never use a company car for private trips?
A. If the car is strictly used for business, and no private use occurs, the business does not need to apply fuel scale charges. However, clear documentation is required to prove this.
Q19. Can a VAT-registered charity apply fuel scale charges?
A. Yes, if a charity operates VAT-registered company cars, fuel scale charges apply in the same way as for businesses.
Q20. How do you report VAT fuel scale charges for multiple company cars?
A. If a business has multiple company cars, each car’s fuel scale charge must be calculated separately, and the total should be included in Box 1 of the VAT return.
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