How to claim VAT back using Fuel Advisory Rates Reply


Mileage for the current tax year can be reclaimed at a maximum  of 45p per mile for the first 10000 miles then 25p after that

http://www.hmrc.gov.uk/rates/travel.htm

Most people are already using these rates, but a large number of businesses don’t reclaim the VAT on the Fuel element – see VAT Notice 700/64

8.7 My employees are paid a mileage allowance, how do I work out my input tax?

You work out your input tax by multiplying the fuel element of the mileage allowance by the VAT fraction. You can do this for all fuel bought

The allowance paid to employees must be based upon mileage actually done.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000090&propertyType=document#P159_17774

 

Company cars: advisory fuel rates
The rates below apply from 1 December 2011.

Engine size

Petrol

LPG

1400cc or smaller 15p 10p
1401cc to 2000cc 18p 12p
Bigger than 2000cc 26p 18p

Engine size

Diesel

1600cc or smaller 12p
1601cc to 2000cc 15p
Bigger than 2000cc 18p

So this is how to work out the claim:

1000 business miles = 1000 x 45p = £450

On which VAT (assuming a 2000cc (bigger) Diesel) 1000 miles x 18p divided by 1.2 x 20% VAT = £30 VAT to reclaim

For large businesses there could be a lot of VAT to reclaim

steve@bicknells.net

 

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