Posted September 9, 2019

Can I reclaim VAT on business mileage?

Advisory Fuel Rates – VAT element

If you are a VAT registered business, you can use HMRC’s advisory fuel rates to calculate the amount of VAT you can reclaim on the fuel element of business mileage.

Advisory fuel rates are used to calculate:

• The amount of VAT your business can reclaim on business mileage in a personal vehicle.
• How much your employer can reimburse employees for business travel in a company car.
• How much an employee needs to pay their employer to reimburse them for private mileage done in their company car.

The advisory fuel rates are reviewed by HMRC on a quarterly basis. The current and historic rates can be found here.

The fuel rate varies depending on the engine size of the car and the type of fuel.

How to calculate VAT on mileage

Example

Sarah’s car is a 1200cc petrol car and she has driven 200 miles for work in her personal car. How much VAT can she reclaim?

Using the current advisory fuel rates, a 1400cc petrol engine allows 12p per miles for the fuel element of the mileage.

12p x 200 = £24

£24 is the gross amount. The VAT element is £4.00, which can be reclaimed on the business’s VAT return.

If you are reclaiming VAT on mileage, ensure you keep your fuel receipts, as you will need to have receipts to cover the VAT reclaimed.

*The information contained above is provided for information purposes only and is not intended to amount to advice on which reliance should be placed. We therefore disclaim all liability and responsibility arising from any reliance placed on such information. Professional advice should be obtained before taking or refraining from taking any action as a result of the above contents.