Company Vans and Car Fuel: New HMRC Rates You Need to Know for April 2026

21 Mar Company Vans and Car Fuel: New HMRC Rates You Need to Know for April 2026

As we edge closer to the end of the tax year, it feels like the goalposts are shifting every time we look at the news. Between the Spring Statement and the looming Making Tax Digital rollout, there is a lot for a Biggleswade business owner to keep track of.

But while the big headlines focus on income tax and "stealth" freezes, there are some very practical, "boots-on-the-ground" changes coming on April 6th that will affect your wallet if you or your team are out on the road. Specifically, I’m talking about company vans and the fuel rates you use to reimburse your drivers.

At Harrison's Accountancy, we’re all about being proactive. We don't want you finding out about a tax hike when your self-assessment bill lands on the doormat next year. So, let’s break down exactly what is changing with HMRC rates for 2026 and how you can make sure your record-keeping is up to scratch.

The Big One: The 2026 Van Benefit Charge Increase

Are you using your company van for more than just "insignificant" private use?

If you provide a company van to an employee (or yourself as a director) and it’s used for private journeys: and no, the commute to and from work doesn't usually count as private use for a van: HMRC views this as a "Benefit in Kind" (BiK).

From April 6th, 2026, the flat-rate van benefit charge is increasing to £4,170.

For those of you who also provide fuel for private travel in that van, the fuel benefit charge is also seeing a proportionate rise. This means if you’re a 20% taxpayer, you’ll be looking at a tax bill of about £834 a year for the van alone. If you’re in the 40% bracket, that doubles.

Why does this matter now?
If your "private use" is literally just popping to the shops once a week, you might want to reconsider whether the convenience of using the van is worth the tax hit. HMRC is quite strict on what constitutes "insignificant" use. If we’re doing your bookkeeping, now is a great time to review your mileage logs to see if you can legitimately claim "restricted private use" and avoid this charge entirely.

New Advisory Fuel Rates (AFRs) from March 1st, 2026

Do you know exactly how much you can pay your drivers per mile without triggering a tax headache?

HMRC updates the Advisory Fuel Rates (AFRs) every quarter. The latest set kicked in on March 1st, 2026, and they will remain the standard until at least the end of May. If you use company cars (not vans) and you either reimburse employees for business travel or require them to repay the cost of private travel, these are the numbers you need to plug into your Xero setup right now.

Petrol and LPG Rates

While petrol prices have been a bit of a rollercoaster lately, the rates have remained relatively stable for this quarter. However, LPG users have seen a slight decrease.

Diesel Rates

Diesel rates have held firm this time around, reflecting the current pump prices across Bedfordshire.

The "Electric" Shift

We’re seeing more and more of our clients in the media and creative sectors switching to EVs. HMRC has finally started to distinguish between where you charge.

• Home Charging: Remains at 7p per mile.
• Public Charging: Has increased to 15p per mile.

This 1p increase in the public charging rate is a nod to the higher costs of using fast-chargers on the A1 or at retail parks. If your team is out on location and relying on the public network, make sure they are logging their charging sessions correctly so you can reimburse them at the higher rate without it being treated as taxable income.

The "Secret" Tax Saving: Reclaiming VAT on Fuel Mileage

Are you missing out on VAT refunds because your mileage records are messy?

This is one of the most common things we spot when taking on new clients at Harrison's Accountancy. Most business owners know they can pay 45p per mile (for the first 10,000 miles) to employees using their own cars for business. But did you know you can reclaim the input VAT on the fuel portion of that 45p?

It sounds technical, but here’s the gist:

1. Your employee drives 100 miles for a business trip in their 1.6L petrol car.
2. You pay them £45 (100 miles x 45p).
3. According to the AFR tables above, 14p of that 45p is considered "fuel."
4. You can reclaim the VAT (usually 20%) on that 14p portion.

In this example, that’s about £2.33 of VAT you can claim back for every 100 miles. It doesn't sound like much, but if you have a fleet of three or four vans or cars doing regular rounds in Biggleswade, Sandy, and beyond, it adds up to hundreds: sometimes thousands: of pounds a year.

The Catch: You must have the fuel receipts. HMRC will not let you reclaim that VAT without a valid VAT receipt dated before or on the date of the journey that covers the amount of fuel used. This is where tools like Xero and receipt-scanning apps become your best friend. No more shoeboxes of faded thermal paper!

Why This Matters for our Media and Tech Clients

If you’re a freelancer in the TV and film industry, your "office" changes every week. One day you’re at Elstree, the next you’re on location in the Cotswolds.

Navigating the difference between "commuting" (which isn't tax-deductible) and "travelling to a temporary workplace" (which is) is a minefield. When you add the new April 2026 van benefit charges into the mix, it’s easy to see how a simple mistake could lead to an unexpected tax bill.

If you are operating through a Limited Company, the way you record your mileage and fuel is a key part of your profit extraction strategy. With dividend tax rates also set to rise this April, making sure you’ve claimed every penny of legitimate business mileage is more important than ever.

Checklist: What Should You Do Before April 6th?

1. Review your Van Usage: If you have a company van, sit down and honestly assess the private use. Is it "insignificant"? If not, are you prepared for the £4,170 benefit charge?
2. Update your Payroll/Accounting Software: Ensure your mileage reimbursement rates match the new AFRs effective from March 1st.
3. Audit your Receipts: Check that your team is actually keeping their fuel receipts for mileage claims. If they aren't, you're leaving VAT money on the table.
4. Consider an EV: With public charging rates increasing and the tax benefits for electric company cars still being very favourable compared to petrol/diesel, is 2026 the year you make the switch?
5. Talk to Us: If you’re unsure how these rates apply to your specific setup: especially if you're a complex SME with multiple vehicles: don't guess.

How Harrison's Accountancy Can Help

We know that "Advisory Fuel Rates" and "Benefit in Kind charges" aren't exactly what gets you out of bed in the morning. You’re busy running your business, whether that’s a retail shop on Biggleswade High Street or a production company working on the next big streaming hit.

Our job is to take this technical "HMRC-speak" and turn it into actionable advice. As a proactive accountancy firm, we don't just wait for you to send us your receipts at the end of the year. We work with you throughout the year to ensure your tech (like Xero and Apron) is doing the heavy lifting, so you stay compliant and tax-efficient.

If the thought of the April 6th changes is giving you a headache, why not get in touch? Whether you need help with your self-assessment or you're looking for a new company formation, we’re here to help you navigate the 2026 tax year with confidence.

Drive safe, and keep those receipts!