HMRC fuel charges 2026 cover several different tax, VAT and mileage rules rather than one universal rate. UK businesses must select the correct treatment according to vehicle ownership, journey type, private fuel provision and whether VAT has been reclaimed.
For 2026/27, the approved mileage rate for an employee’s own car or van is 55p for the first 10,000 qualifying business miles and 25p thereafter.
Separate changes include a £29,200 company car fuel benefit multiplier, a £798 van fuel benefit charge, revised VAT road fuel scale charges and new company-car Advisory Fuel Rates from 1 June 2026.
What Do HMRC Fuel Charges 2026 Actually Cover?
The phrase “HMRC fuel charges 2026” can describe four separate systems with different purposes.
Approved Mileage Allowance Payments apply when an employee or qualifying director uses a personally owned vehicle for business travel. Advisory Fuel Rates concern company cars and cover business-fuel reimbursement or repayment for private fuel.
The company car fuel benefit and van fuel benefit apply where an employer provides free or subsidised fuel for private journeys. VAT road fuel scale charges are different again: they account for private consumption when input VAT has been reclaimed on fuel used in a business vehicle.
Businesses should therefore establish four facts before choosing a rate: who owns the vehicle, who purchased the fuel, whether the journey was business or private, and whether VAT was reclaimed. A figure that is correct for an employee’s car may be incorrect for a company car.
When Did the New HMRC Fuel Rates Take Effect in 2026?
The principal 2026 changes did not all begin on the same date.
Important 2026 Dates:
- 6 April 2026: The new 2026/27 company car and van benefit figures took effect.
- 6 April 2026: The 55p mileage rate took retrospective effect for the 2026/27 tax year.
- 1 May 2026: Revised VAT road fuel scale charges began applying through relevant accounting periods.
- 1 June 2026: Revised Advisory Fuel Rates replaced the March 2026 rates.
- 30 April 2027: The current VAT road fuel scale-charge schedule ends.
The VAT change is tied to the beginning of a prescribed accounting period. A quarterly business whose next period began after 1 May would use the new scale from that period’s start, rather than recalculating an earlier period. Advisory Fuel Rates are reviewed quarterly on 1 March, 1 June, 1 September and 1 December.
How Do VAT Road Fuel Scale Charges Work From 1 May 2026?
A VAT road fuel scale charge accounts for private fuel when a business reclaims VAT on fuel supplied for a vehicle that also has private use. The charge is calculated using the vehicle’s CO₂ band and a one-, three- or 12-month VAT period.
The official statement is explicit:
“Businesses must use the new scales from the start of the next prescribed accounting period beginning on or after 1 May 2026.”
The full calculation rules appear in the official VAT fuel scale guidance.
Who Must Account For Private Fuel Use?
The scale-charge method is relevant where a VAT-registered business reclaims input VAT on fuel that covers both business and private travel. The published flat rate applies to one individual, one specific vehicle and the relevant accounting period.
A business may instead restrict its VAT claim to fuel used for business journeys, provided that it can support the calculation. The appropriate approach depends on its fuel costs, private use and available records.
CO₂ Bands And VAT Accounting Periods
The CO₂ figure may be taken from the vehicle logbook, an approval certificate or a corresponding certificate of conformity. If several figures appear, the combined figure is used; where separate fuel figures appear, the lowest applicable combined figure is used.
A figure that is not divisible by five is rounded down to the nearest multiple of five. Older cars without a CO₂ figure use band 140 for engines up to 1,400cc, band 175 for engines over 1,400cc but below 2,000cc, and band 225 or more for engines above 2,000cc.
Part-period use must be apportioned. Where successive cars fall within the same CO₂ band, they may be treated as one car for this calculation.
What Are the 2026/27 VAT Road Fuel Scale Charge Rates?
The scale-charge table runs from 120g/km or less to 225g/km or more. Each cell below shows the VAT-inclusive charge, VAT element and VAT-exclusive value, in that order.
Complete VAT Scale Charge Table:
| CO₂ Band | 12 Months: Gross / VAT / Net | 3 Months: Gross / VAT / Net | 1 Month: Gross / VAT / Net |
| 120 or less | £657 / £109.50 / £547.50 | £163 / £27.17 / £135.83 | £54 / £9 / £45 |
| 125 | £983 / £163.83 / £819.17 | £246 / £41 / £205 | £81 / £13.50 / £67.50 |
| 130 | £1,051 / £175.17 / £875.83 | £261 / £43.50 / £217.50 | £86 / £14.33 / £71.67 |
| 135 | £1,114 / £185.67 / £928.33 | £278 / £46.33 / £231.67 | £92 / £15.33 / £76.67 |
| 140 | £1,182 / £197 / £985 | £294 / £49 / £245 | £98 / £16.33 / £81.67 |
| 145 | £1,245 / £207.50 / £1,037.50 | £311 / £51.83 / £259.17 | £103 / £17.17 / £85.83 |
| 150 | £1,314 / £219 / £1,095 | £328 / £54.67 / £273.33 | £109 / £18.17 / £90.83 |
| 155 | £1,377 / £229.50 / £1,147.50 | £344 / £57.33 / £286.67 | £114 / £19 / £95 |
| 160 | £1,445 / £240.83 / £1,204.17 | £361 / £60.17 / £300.83 | £119 / £19.83 / £99.17 |
| 165 | £1,508 / £251.33 / £1,256.67 | £377 / £62.83 / £314.17 | £125 / £20.83 / £104.17 |
| 170 | £1,576 / £262.67 / £1,313.33 | £393 / £65.50 / £327.50 | £130 / £21.67 / £108.33 |
| 175 | £1,640 / £273.33 / £1,366.67 | £409 / £68.17 / £340.83 | £136 / £22.67 / £113.33 |
| 180 | £1,708 / £284.67 / £1,423.33 | £426 / £71 / £355 | £142 / £23.67 / £118.33 |
| 185 | £1,771 / £295.17 / £1,475.83 | £442 / £73.67 / £368.33 | £146 / £24.33 / £121.67 |
| 190 | £1,839 / £306.50 / £1,532.50 | £459 / £76.50 / £382.50 | £152 / £25.33 / £126.67 |
| 195 | £1,902 / £317 / £1,585 | £475 / £79.17 / £395.83 | £158 / £26.33 / £131.67 |
| 200 | £1,971 / £328.50 / £1,642.50 | £492 / £82 / £410 | £163 / £27.17 / £135.83 |
| 205 | £2,034 / £339 / £1,695 | £509 / £84.83 / £424.17 | £169 / £28.17 / £140.83 |
| 210 | £2,102 / £350.33 / £1,751.67 | £524 / £87.33 / £436.67 | £174 / £29 / £145 |
| 215 | £2,165 / £360.83 / £1,804.17 | £541 / £90.17 / £450.83 | £180 / £30 / £150 |
| 220 | £2,233 / £372.17 / £1,860.83 | £557 / £92.83 / £464.17 | £185 / £30.83 / £154.17 |
| 225 or more | £2,297 / £382.83 / £1,914.17 | £574 / £95.67 / £478.33 | £190 / £31.67 / £158.33 |
The correct row must be combined with the business’s actual VAT accounting period and any required part-period apportionment.
What Are the Company Car and Van Fuel Benefit Charges for 2026/27?
Company vehicle benefits arise where a car or van is available for private use or an employer pays for private fuel. They are separate from amounts reimbursed for business mileage.
For 2026/27, the company car fuel benefit multiplier is £29,200, up from £28,200. It is multiplied by the car’s appropriate percentage, which depends mainly on CO₂ emissions and fuel type; £29,200 is therefore not the employee’s final taxable benefit or tax bill.
The van fuel benefit is £798, compared with £769 in 2025/26. The separate van benefit charge is £4,170, up from £4,020. The measures were described officially as annual Consumer Price Index upratings affecting employers and employees where company vans or private fuel are provided.
Since 2015/16, the van benefit has moved from £3,150 to £3,170, £3,230, £3,350, £3,430, £3,490, £3,500, £3,600, £3,960 for two tax years, £4,020 and £4,170. Over the same period, the car fuel multiplier rose from £22,100 to £29,200, while the van fuel benefit moved from £594 to £798.
What Are the HMRC Advisory Fuel Rates From 1 June 2026?
Advisory Fuel Rates apply only to employees using company cars. They may be used to reimburse business fuel or calculate the amount an employee must repay for private fuel.
Petrol And LPG Company-Car Rates
Petrol rates are 14p for engines up to 1,400cc, 17p for 1,401cc to 2,000cc and 26p above 2,000cc. LPG rates for the same bands are 11p, 13p and 21p.
Diesel Company-Car Rates
Diesel rates are 15p for engines up to 1,600cc, 17p for 1,601cc to 2,000cc and 23p for engines above 2,000cc.
What Rates Apply To Electric And Hybrid Company Cars?
Fully electric company cars have separate rates of 7p for home charging and 15p for public charging. Mixed charging may be apportioned fairly, while hybrids are treated as petrol or diesel vehicles.
The current advisory fuel rates also allow the previous figures to be used for one month after a change.
Current Rates Summary:
| Vehicle Or Fuel | Band | From 1 June 2026 | March–May 2026 |
| Petrol | Up to 1,400cc | 14p | 12p |
| Petrol | 1,401cc–2,000cc | 17p | 14p |
| Petrol | Over 2,000cc | 26p | 22p |
| LPG | Up to 1,400cc | 11p | 10p |
| LPG | 1,401cc–2,000cc | 13p | 12p |
| LPG | Over 2,000cc | 21p | 19p |
| Diesel | Up to 1,600cc | 15p | 12p |
| Diesel | 1,601cc–2,000cc | 17p | 13p |
| Diesel | Over 2,000cc | 23p | 18p |
| Electric | Home charging | 7p | 7p |
| Electric | Public charging | 15p | 15p |
An evidence-based higher rate may be used where the employer can demonstrate that the actual fuel cost per mile is higher. Unsupported excess reimbursement can create taxable earnings and Class 1 National Insurance consequences.
How Does the 55p HMRC Mileage Rate Apply in 2026/27?
The 55p rate applies when an employee uses a personally owned car or van for qualifying business travel. It covers the first 10,000 business miles in the tax year; each additional mile is covered at 25p.
The previous first-band rate was 45p from 2011/12 to 2025/26. Motorcycles remain at 24p per mile, bicycles at 20p, and an employer may pay 5p per passenger per business mile for carrying fellow employees on qualifying work journeys.
The official mileage and fuel rates confirm that the increase has retrospective effect from 6 April 2026.
An employer may pay less than the approved rate, but the employee may be able to claim Mileage Allowance Relief on the difference. Where more is paid, the excess is generally taxable.
Self-employed businesses using simplified mileage deductions also use 55p and 25p, but once a vehicle is placed on that method, the chosen basis must continue while it remains in the business.
How Should UK Businesses Calculate, Record And Report Fuel Costs?
Accurate treatment begins with classifying the vehicle and payment before entering anything into payroll or a VAT return.
Practical Compliance Steps:
- Identify whether the vehicle belongs to the employee, director or business.
- Separate qualifying business journeys from private travel and ordinary commuting.
- Record the mileage, date, destination and business purpose of each journey.
- Apply 55p and 25p only to qualifying use of a private car or van.
- Use Advisory Fuel Rates only for company cars.
- Check the vehicle’s CO₂ band before applying a VAT scale charge.
- Review whether private fuel creates a reportable company car or van benefit.
- Update payroll and accounting software for the correct effective date.
These controls help prevent one reimbursement category from being incorrectly processed under another.
Payroll And Mileage Records
Payroll records should distinguish mileage allowances, company-car fuel reimbursement, private-fuel repayments and taxable benefits. Employers should also retain the calculation behind any company car fuel benefit and evidence of employee repayments.
What Evidence Should Be Retained For VAT And Mileage Claims?
Useful evidence includes mileage logs, valid VAT fuel receipts, vehicle registration details, CO₂ records, charging invoices and accounting-period calculations. A higher company-car reimbursement rate should be supported by evidence showing a higher actual cost per mile.
Which Mistakes Can Lead To Incorrect HMRC Fuel Claims Or Tax Charges?
Most errors arise when a business selects a rate before confirming the vehicle arrangement.
Common Errors To Avoid:
- Applying the 55p rate to an employee driving a company car.
- Using an Advisory Fuel Rate for a privately owned vehicle.
- Treating the £29,200 multiplier as the employee’s final tax bill.
- Using the March company-car rates after the transition period.
- Choosing the wrong CO₂ band or failing to round down correctly.
- Applying the VAT scale charge from the wrong accounting period.
- Treating ordinary commuting as qualifying business mileage.
- Reclaiming fuel VAT without adequate evidence.
- Ignoring private fuel supplied through a company car or van.
Checking vehicle ownership, journey purpose, fuel payment and VAT treatment in that order gives a business a reliable decision path.
Conclusion
HMRC fuel charges 2026 include separate rules for personally owned vehicles, company cars, private fuel benefits and VAT. The key figures are 55p for the first 10,000 qualifying miles, a £29,200 car fuel benefit multiplier, a £798 van fuel benefit and revised VAT and company-car fuel rates.
Businesses should not use these figures interchangeably. Correct treatment depends on the vehicle owner, journey type, fuel arrangement, CO₂ band and relevant effective date.
Frequently Asked Questions
Are HMRC Fuel Charges The Same As Fuel Duty?
No. Fuel duty is charged on fuel products, while HMRC fuel charges in this context concern mileage, company vehicles, employee benefits and VAT.
Can A Business Avoid A VAT Road Fuel Scale Charge?
A business may restrict its VAT claim to demonstrable business fuel instead of reclaiming all fuel VAT and applying a scale charge. Its records must support the chosen treatment.
Which CO₂ Band Applies When A Vehicle Has No Emissions Figure?
An older vehicle uses band 140 up to 1,400cc, band 175 above 1,400cc but below 2,000cc, and band 225 or more above 2,000cc. The fallback is based on cylinder capacity.
Can Previous Advisory Fuel Rates Still Be Used?
Previous rates may be used for up to one month after new rates take effect. After that period, the current rate or a supported evidence-based rate should be used.
Do Hybrid Company Cars Use The Electric Rate?
No. Hybrid cars are treated as either petrol or diesel cars when applying Advisory Fuel Rates.
Is Ordinary Home-To-Work Travel Business Mileage?
Ordinary commuting is generally private travel rather than qualifying business mileage. A journey does not become allowable merely because the employee uses it to reach work.
Can An Employer Pay More Than An Advisory Fuel Rate?
Yes, where evidence shows that the actual company-car fuel cost per mile is higher. Without supporting evidence, the excess may need to be treated as taxable earnings.
Note: Advisory Fuel Rates are reviewed quarterly and may change during the year. Businesses should confirm the latest applicable rate before processing company-car mileage, private-fuel repayments or payroll benefits.
