Guide to Reclaiming VAT on Fuel

Reclaiming VAT on Fuel

Are you are thinking about reclaiming the VAT on your fuel, but do you know the rules surrounding this for your VAT return? The treatment of VAT can be complex, so we have prepared this easy guide for you to get started.
There are three options for you to choose from when reclaiming your VAT on Fuel:
Keeping a mileage log – the most times consuming of the options and the most accurate
Using the Fuel Scale charge – this allows you to reclaim all VAT on fuel
Choose not to reclaim any VAT on fuel

Keeping a mileage log

VAT can only be reclaimed on the fuel used for the business portion of your travel. In order to separate your business and personal mileage you could choose to keep a mileage log. This is perhaps the most time-consuming option but also the most accurate. There are many apps out there now which can help you to keep log of all your business mileage and often these apps can be linked straight to your accounting software. other ways of keeping a mileage log could include, creating an Excel spreadsheet (we can help with this if you need us to). Be sure that you keep accurate records though, if you claim personal mileage in error then HMRC can insist you use the fuel scale charge on your VAT return.

Using the Fuel Scale Charge

If you want to save yourself the hassle of separating your business and personal mileage then you could choose to pay the fuel scale charge. This charge is based on the Co2 emission band of your car, it is a fixed charge which is not related to the amount of actual use of the car. If you want to work out how much the fuel scale charge is for your car there is a handy fuel scale charge calculator on the HMRC website, we will attach a link here for you:

Once you have worked out the fuel scale charge for your car you need to include it within the VAT return as money that you owe to HMRC. with the fuel scale charge you can reclaim all the VAT on fuel regardless of whether it is business or personal.

Choosing not to reclaim the VAT

This option is generally used if the amount of petrol being reclaimed is less than the fuel scale charge, or very low and therefore not worth the time involved in all the inputting of the information.

If in doubt, ask us! We can go through your circumstances when it comes to reclaiming fuel and help you to pick the best option. We can also help you find a mileage log app which links to your accounting software saving you a lot of time and meaning you can keep an eye on your finances in real time.