VAT rate and Fuel Duty – for most fuels
VAT on fuel costs
There are different ways of reclaiming VAT on fuel, if you do not pay a fixed rate under the Flat Rate Scheme.
You can reclaim all the VAT on fuel if your vehicle is used only for business. There are three ways of handling VAT if you use the vehicle for both business and private purposes. You can:
- reclaim all the VAT and pay the right fuel scale charge for your vehicle
- only reclaim the VAT on fuel you use for business trips – you’ll have to keep detailed mileage records
- choose not to reclaim any VAT, e.g. if your business mileage is so low that the fuel scale charge would be higher than the VAT you can reclaim
Please note: If you choose not to reclaim VAT on fuel for one vehicle you cannot reclaim VAT on any fuel for vehicles used by your business.
VAT on mileage
You can reclaim VAT on the business portion of any fuel purchased by keeping a detailed mileage log – to distinguish between business and personal use. You can then calculate the VAT cost to make a claim. Alternatively, HMRC provide Advisory Fuel Rates to make calculation and record keeping easier:
Advisory Fuel Rates from 1 December 2019
These rates apply from 1st December 2019. You can use the previous rates for up to 1 month from the date the new rates apply.
|Engine size||Petrol – amount per mile||LPG – amount per mile|
|1400cc or less||12 pence||8 pence|
|1401cc to 2000cc||14 pence||9 pence|
|Over 2000cc||21 pence||14 pence|
|Engine size||Diesel – amount per mile|
|1600cc or less||9 pence|
|1601cc to 2000cc||11 pence|
|Over 2000cc||14 pence|
Hybrid cars are treated as either petrol or diesel cars for this purpose.
Advisory Electricity Rate
The Advisory Electricity Rate for fully electric cars is 4 pence per mile.
Electricity is not a fuel for car fuel benefit purposes.
More info: GOV.UK
If self employed, mileage VAT costs can be reclaimed as a simple tax relief for motoring expenses. Instead of keeping records of all receipts and then separating business and personal use, you can simply claim 45p per mile (or 25p for mileage over 10,000) on business mileage.
The above method of reclaiming VAT on fuel and mileage can also be used if you’re voluntarily registered for VAT and trading under the VAT turnover threshold. If, however, you are VAT-registered and trading above the VAT threshold, then the full cost method must be used for VAT.
Employees using personal vehicles for work journeys can claim back costs (inc. VAT) of fuel and mileage from their employer, or get a tax deduction for the same amount from their employment income.
Approved mileage rates from tax year 2011 to 2012 to present date
|From tax year 2011 to 2012 onwards||First 10,000 business miles in the tax year||Each business mile over 10,000 in the tax year|
|Cars and vans||45p||25p|
HMRC rates include estimates for both fixed (insurance, road tax etc.) and variable (wear and tear) costs of running a car. After 10,000 miles, HMRC considers you reimbursed for fixed costs and, therefore, a lower rate applies thereafter. More info: GOV.UK