Claiming back VAT on fuel
HMRC offers a number of alternative methods for claiming back VAT on car fuel where there may be a mix of business and private mileage. They fall into a number of broad categories:
- Standard scale charge – HMRC operates a useful simplification measure that allows businesses to use a standardised scale charge to value fuel costs for private use. The scale charge is a fixed amount based on a vehicles CO2 rating. This saves business car users the chore of keeping detailed records of actual private mileage. Using this method, a business reclaims all the VAT and then pay the appropriate fuel scale charge for each vehicle to cover private use. Most businesses, particularly small and medium sized businesses, which do not keep detailed mileage records covering all journeys, use the road fuel scale charge scheme.
- Record business mileage – another option available is to only reclaim the VAT on fuel used for business trips. This option will require businesses to keep detailed mileage records.
- Reclaim no VAT on fuel – this may be the most suitable option if business mileage is so low that using the fuel scale charge would result in a higher amount being payable.
If a vehicle is only used for business purposes all the VAT on fuel costs can be recovered, but please note that HMRC will expect to see evidence that private use of the vehicle is not allowed.
Also, businesses that choose not to reclaim VAT on fuel for one vehicle can’t reclaim VAT on any fuel for other vehicles used by the business.
Working out the best strategy can be time consuming, please call if you would like our help.