RECLAIMING VAT ON MILEAGE? NEW ADVISORY FUEL RATES EFFECTIVE FROM 1 SEPTEMBER 2015

RECLAIMING VAT ON MILEAGE? NEW ADVISORY FUEL RATES EFFECTIVE FROM 1 SEPTEMBER 2015

If you pay a mileage allowance to your staff for business journeys whether they are using their own vehicle or a company car, if your business is VAT registered you can reclaim VAT on the fuel element of those mileage claims.

Mileage Allowance Expense Claim

The current mileage allowance published by HMRC for private cars is 45p per mile for the first 10,000 miles and then 25p per mile for business miles driven within the same tax year.

These rates are set to comprise of a vehicle’s running costs as well as the fuel costs. Each quarter HMRC publish their latest mileage allowance for company cars.

For either situation, the good news is that the mileage allowance is a tax allowable expense.

Reclaiming VAT on Mileage

VAT registered businesses can reclaim the VAT from the fuel element of the mileage allowance.

To calculate this the HMRC Advisory Rates, which are published four times a year, should be used. The new advisory rates are applicable from 1 September 2015 2015 and are detailed below.

Engine sizePetrolLPG
1400cc or less11p7p
1401cc to 2000cc14p9p
Over 2000cc21p14p

Engine sizeDiesel
1600cc or less9p
1601cc to 2000cc11p
Over 2000cc13p

To reclaim the VAT of the fuel element you must retain VAT receipts to cover the amount of fuel used during the business journey.

When an employee submits an expense claim, using MyExpensesOnline, the submission will record the engine size of their car and require VAT receipts for the fuel purchased.

Ensure that you are claiming the maximum VAT possible by contacting our team at MyExpensesOnline.

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