Fuel Scale Charge


I am the director of a limited company and regularly use my private car for business journeys. Can I reclaim VAT on the fuel purchased?


Where a vehicle is used for both business and private purposes, provided the company does not pay a fixed rate under the Flat Rate Scheme, there a several ways a company could recover the VAT on fuel purchased. The company could choose to reclaim the VAT on fuel purchased for business use, and therefore would not claim VAT on any private mileage. In this case the company would need to keep detailed mileage records for any mileage incurred, the purpose of the journey and the car details. Alternatively, the company could choose to reclaim all of the VAT on fuel purchased and pay the correct fuel scale charge for the vehicle. This adds back a fixed sum, per VAT period, to account for private consumption of fuel. The fuel scale charge is calculated according to a car’s CO2 emissions and the fixed charge is added to output VAT on the company’s VAT return. You can find details of your cars CO2 emissions on the DVLA website. For cars which are too old to have a CO2 emissions figure, you should identify the CO2 band based on engine size. Note that fuel scale charges are amended each year and can be found on the HMRC website. If business mileage is very low the fuel scale charge may be higher than the VAT, the company could reclaim. In this case the company can choose not to reclaim any VAT. If, however, a company chooses not to reclaim VAT on fuel for one vehicle, it cannot reclaim VAT on any fuel for other vehicles used by the company. If you are unsure about the best way to claim business miles or how to minimise your tax exposure you should consult your tax advisor.

The advice above is specific to the facts surrounding the questions posed. Neither PKF-FPM nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.

Get in touch with Ciara Ryan via email c.ryan@pkffpm.com