VAT on fuel

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    I run a small company and im totally confused about VAT on fuel. What is the VAT fuel scale charge? What alternatives are to the VAT fuel scale charge? Does the VAT fuel scale charge apply to vans?

    If a business recovers VAT on road fuel, it will have to account for output VAT when a vehicle is put to private use.



    There are different ways of reclaiming VAT on fuel, if you don’t pay a fixed rate under the Flat Rate Scheme.

    1. You can reclaim all the VAT on fuel if your vehicle is used only for business.

    2. There are 3 ways of handling VAT if you use the vehicle for both business and private purposes. You can:

    (i) reclaim all the VAT and pay the right fuel scale charge for your vehicle
    (ii) only reclaim the VAT on fuel you use for business trips – you’ll have to keep detailed mileage records
    (iii) choose not to reclaim any VAT, eg if your business mileage is so low that the fuel scale charge would be higher than the VAT you can reclaim

    If you choose not to reclaim VAT on fuel for one vehicle you can’t reclaim VAT on any fuel for vehicles used by your business.

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