Reclaiming VAT on Fuel

Forum Categories VAT ADMINISTRATION ISSUES Reclaiming VAT on Fuel

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  • #55531

    Hi all,
    My wife is self-employed & would normally have happily used the Flat Rate Scheme to keep VAT matters nice and simple.
    However, the Limited Cost Trader rules have meant that she’s in the process of switching to the standard scheme.
    (wrote the letter to HMRC about a month back, but no reply yet…)

    I’m reasonably clear about a number of expenses where we can offset the payment made to HMRC (like agent’s commission), but it’s less clear on a couple of other things.
    This enquiry is mainly concerned with petrol costs. HMRC offer several options, and it looks like we’ll need to do the ‘claim for business trips’ option. (although I admit that I’m still unclear on how the Fuel Scale Charge method works)

    Could someone offer some guidance as to how the ‘claim for business trips’ option works?
    In my mind, we need to write down something like “for 5 days this week, the journey from Home to work at X was done, with a total of 200 miles.”
    Naturally we will obtain VAT receipts for any fuel bought.
    But how does the above get processed into an amount of VAT to be reclaimed?

    Feel free to point me at a relevant article, if that’s easier than writing a lengthy reply – but any useful advice would be appreciated.

    Thanks, Ralph


    There are 4 main ways to deal with VAT on fuel.

    Claim 100% of input tax: Only if you use the the car 100% business all the time eg a taxi firm. It is virtually impossible to have a car that has no private usage.

    Claim 100% of input tax and pay the correct fuel scale charge: for your vehicle You can work out your fuel scale charge here This method can work out expensive unless the car does a lot of mileage and has low CO2 emissions.

    Claim VAT just on business mileage: You will need to keep a detailed business mileage log and can claim 45p per mile in your accounts. This will allow you to claim back the VAT on fuel element of this rate using the advisory fuel rates, published here. You must make sure that you retain VAT receipts to show fuel purchased of at least the amount that you are reclaiming.

    Claim no VAT at all: if you choose this option then you need to apply this across all the vehicles in your business, including commercial vehicles

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