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.
| 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
