Claiming VAT on business mileage

[Katemorgan]

Hi,

One of our employees is using companys car for both business and private travels. He pays for petrol himself (using his private credit card) and submits claim for business mileage as per Advisory fuel rates (currently being 0.11p). Are we allowed to claim VAT on his business travels?

Another employee is using private car for business travels and we reimburse him 0.45p for business travels. Are we allowed to claim VAT on his business travels?

Thanks

[Trevor S]

Hi Kate,

For the company car user, you can reclaim the VAT element (i.e. 1/6th) of the 11p per mile. You can also reclaim VAT on the business use by the private car owner – but not on the full 45p, as this amount is also intended to include a contribution towards non-fuel costs. In theory you can use any recognised published fuel rates to count as the “fuel element” of the 45p.  But unless the amounts involved are huge, it’s probably easiest to use the same HMRC Advisory Fuel Rates that you’re already using for company car users.

In both cases (company car and private car users) the employee should obtain VAT receipts when they buy fuel and submit to you with their claims – which you’ll then need to keep on file. Clearly the amounts on the receipts won’t tie up exactly to the claim values – but in total there should be sufficient receipts submitted to cover the 11p per mile being claimed.

HMRC guidance is in sections 8.8 – 8.10 of HMRC manual 700/64: https://www.gov.uk/guidance/vat-on-motoring-expenses-notice-70064

[Katemorgan]

Hi Trevor,

Thank you so much for detailed explanation and the guidance. I really appreciate it.

I think we can reclaim 1/5th of the 11p per mile not 1/6th?

[Trevor S]

It is 1/6th, because the 11p is the VAT-inclusive amount.  So it’s 9.17p plus 1.83p VAT (20% of the 9.17p) = 11p

[Author]

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