March 2007

VAT Fuel Scale Charges

HMRC have produced some of the tables but not the final VAT fuel scale charges which are due to come into effect on 1 May 2007. Businesses will have to use the new scale charges from the start of their first accounting period beginning on or after this date. HMRC are announcing the change early to allow businesses time to familiarise themselves with the new charging structure and make any necessary IT system changes.

The existing system, which is based on the engine size and fuel type of a car, will be replaced by a VAT fuel scale charge based solely on the CO2 emissions of the car. The new table, which mirrors that used for benefit in kind purposes, will have 21 bands with 5g/km of CO2 increments. HMRC have published an outline of the table but have not as yet put any amounts in the table which will be finalised following Budget 2007.

HMRC state that this change is not intended as a revenue raising measure and that the change to a CO2 based system should be revenue neutral overall.

We have also included a link which will enable you to check the CO2 emissions of most cars.

Internet Links:

HMRC Brief and CO2 emissions data