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Budget 2007: VAT on fuel – Scale charges move to CO2 basis

22nd Mar 2007
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This Budget also sees the introduction of a change to a CO2 basis for calculating the scale charge for VAT on fuel used for private motoring. Rebecca Benneyworth reports.

This measure applies most generally to the self employed, as in larger businesses it would go hand in hand with a fuel scale charge for benefit in kind, and there are only around 40,000 drivers who are presently taxed on the benefit of free fuel.

The scale charges related to engine size are to be replaced from 1 May 2007 with a scale charge based on CO2 emissions, using the benefit in kind Table to set the emissions bands. This makes the published Table of scale charges quite long, but the distinction between petrol and diesel cars has been abolished and the scale charge is determined solely by reference to emissions. Overall, sample calculations indicate that there is a slight reduction in fuel scale charges for most drivers.

As with the benefit in kind rates, the emissions of the car are rounded down to the next 5g/km interval, and special rates will apply to cars without an official emissions figure.


A Ford Fiesta 1400cc petrol car with emissions of 147g/km will see the VAT scale charge change from £40.66 per quarter now to £29.04 per quarter.

A Peugeot 407 saloon 2000 petrol car will change from £51.53 per quarter to £45.28 based on emissions of 192g/km.

A Jaguar XK series, 4.2 litre petrol with emissions of 265g/km will change from £75.66 per quarter to £63.45 per quarter.

A Peugeot 2.7 litre diesel V6 Sport with emissions of 223g/km will increase from £49.30 to £56.30, as the diesel figures increase slightly to meet the petrol charges.

Table – quarterly fuel scale charge (VAT amount)

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