Can I reclaim VAT on mileage?
- As bookkeepers at Holy brook one of the most frequently asked questions by our clients is whether they can claim VAT on mileage. If you are VAT registered and not using the flat the rate scheme, the answer is yes, however the amount you claim depends on certain things.
What is the basis of reclaiming VAT on mileage?
- The amount of VAT a business can reclaim on mileage is a sixth of the total cost of fuel. This is due to the fact that standard VAT rate is 20%.
- The HMRC suggests that an employee or business owner who uses their own car for business travel can claim mileage at the amount of 45p/mile for up to 10,000 miles and 25p thereafter. The 45p/mile is split into two consecutive parts, the first is fuel and the second being the wear and tear.
How much does this translate to in practice?
- If you have a personal car and pay for your own fuel and want to reclaim mileage from your employer, the amount that you could reclaim would depend on the size of your vehicle. HMRC publish advisory fuel rates which can change over time. To find the current mileage rate, you will have to go to the HMRC website.
For example at the time of writing if drove a 1400 CC car you you could reclaim VAT on 12p per mile ie 2p per mile
What admin is involved?
- HMRC require you to keep VAT receipts that cover the amount being claimed, so ensure that you have receipts covering the full cost of the fuel, you can use your expenses app to do this in the same way as other Making Tax Digital receipts.
- You should keep records of the actual mileage done – a spreadsheet, or app can help here.
- Always discuss with your bookkeeper or accountant.
If you’ve any questions about this article do feel free to get in touch with us.