Claiming VAT on mileage is a benefit you should only take advantage of if you provide free fuel to employees (for both business and personal use) and reclaim all of the VAT on that fuel. This is done under a scheme called the “fuel scale charge”.
You shouldn’t use the fuel scale charge for your company if:
• you provide free fuel to your staff and you reclaim NONE of the VAT on the fuel,
• you reclaim VAT only on the fuel used for business reasons
• your staff fully pay you back on their private mileage.
How does it work?
The Fuel Scale Charge was introduced to simplify the process of accounting for VAT on private usage of fuel. It basically returns a fixed amount per VAT period to accommodate for the private consumption of road fuel.
You use one scale charge for each car your company pays private fuel for, the amount of which is based on the car’s carbon dioxide output. Bi-fuel cars with two CO2 emission figures can use the lower amount to calculate the fuel scale charge.
Businesses on the VAT Flat Rate Scheme cannot claim VAT on fuel, so the fuel charge will not apply. Input VAT for these companies is altered with the flat rate percentage automatically.
VAT Fuel Scale Charges effective 1st May 2019
Whether your company accounts for VAT on a yearly, quarterly or monthly basis, you can use the information below to understand how the Fuel Scale Charge may apply to your business.
Annual VAT fuel scale charges effective 1st May 2019
| CO2 band | VAT fuel scale charge over a 12 month period | VAT on 12 month charge | VAT exclusive 12 month charge |
|---|---|---|---|
| 120 or less | £592 | £98.67 | £493.33 |
| 125 | £886 | £147.67 | £738.33 |
| 130 | £947 | £157.83 | £789.17 |
| 135 | £1,004 | £167.33 | £836.67 |
| 140 | £1,066 | £177.67 | £888.33 |
| 145 | £1,123 | £187.17 | £935.83 |
| 150 | £1,184 | £197.33 | £986.67 |
| 155 | £1,241 | £206.83 | £1,034.17 |
| 160 | £1,303 | £217.17 | £1,085.83 |
| 165 | £1,360 | £226.67 | £1,133.33 |
| 170 | £1,421 | £236.83 | £1,184.17 |
| 175 | £1,478 | £246.33 | £1,231.67 |
| 180 | £1,540 | £256.67 | £1,283.33 |
| 185 | £1,597 | £266.17 | £1,330.83 |
| 190 | £1,658 | £276.33 | £1,381.67 |
| 195 | £1,715 | £285.83 | £1,429.17 |
| 200 | £1,777 | £296.17 | £1,480.83 |
| 205 | £1,834 | £305.67 | £1,528.33 |
| 210 | £1,895 | £315.83 | £1,579.17 |
| 215 | £1,952 | £325.33 | £1,626.67 |
| 220 | £2,014 | £335.67 | £1,678.33 |
| 225 or more | £2,071 | £345.17 | £1,725.83 |
Quarterly VAT fuel scale charges effective 1st May 2019
| CO2 band | VAT fuel scale charge over a 3 month period | VAT on 3 month charge | VAT exclusive 3 month charge |
|---|---|---|---|
| 120 or less | £147 | £24.50 | £122.50 |
| 125 | £222 | £37 | £185 |
| 130 | £236 | £39.33 | £196.67 |
| 135 | £250 | £41.67 | £208.33 |
| 140 | £265 | £44.17 | £220.83 |
| 145 | £280 | £46.67 | £233.33 |
| 150 | £295 | £49.17 | £245.83 |
| 155 | £310 | £51.67 | £258.33 |
| 160 | £325 | £54.17 | £270.83 |
| 165 | £340 | £56.67 | £283.33 |
| 170 | £354 | £59 | £295 |
| 175 | £369 | £61.50 | £307.50 |
| 180 | £384 | £64 | £320 |
| 185 | £399 | £66.50 | £332.50 |
| 190 | £414 | £69 | £345 |
| 195 | £429 | £71.50 | £357.50 |
| 200 | £444 | £74 | £370 |
| 205 | £458 | £76.33 | £381.67 |
| 210 | £473 | £78.83 | £394.17 |
| 215 | £487 | £81.17 | £405.83 |
| 220 | £502 | £83.67 | £418.33 |
| 225 or more | £517 | £86.17 | £430.83 |
Monthly VAT fuel scale charges effective 1st May 2019
| CO2 band | VAT fuel scale charge over a 1 month period | VAT on 1 month charge | VAT exclusive 1 month charge |
|---|---|---|---|
| 120 or less | £49 | £8.17 | £40.83 |
| 125 | £73 | £12.17 | £60.83 |
| 130 | £78 | £13 | £65 |
| 135 | £83 | £13.83 | £69.17 |
| 140 | £88 | £14.67 | £73.33 |
| 145 | £93 | £15.50 | £77.50 |
| 150 | £98 | £16.33 | £81.67 |
| 155 | £103 | £17.17 | £85.83 |
| 160 | £107 | £17.83 | £89.17 |
| 165 | £113 | £18.83 | £94.17 |
| 170 | £117 | £19.50 | £97.50 |
| 175 | £122 | £20.33 | £101.67 |
| 180 | £128 | £21.33 | £106.67 |
| 185 | £132 | £22 | £110 |
| 190 | £137 | £22.83 | £114.17 |
| 195 | £143 | £23.83 | £119.17 |
| 200 | £147 | £24.50 | £122.50 |
| 205 | £152 | £25.33 | £126.67 |
| 210 | £157 | £26.17 | £130.83 |
| 215 | £162 | £27 | £135 |
| 220 | £167 | £27.83 | £139.17 |
| 225 or more | £172 | £28.67 | £143.33 |
Claiming the Fuel Scale Charge on your VAT Return
The appropriate fixed charge is applied to the output figure on your VAT return. You can do this using the information listed above.
First, find the “VAT on 1/3/12 month charge” figure in the third column in the tables above that applies to you. This can then be added to Box 1 of your VAT form.
Using the fourth column in the tables, you can find the “VAT exclusive 1/3/12 month charge” for Box 6 of your form.
Is it worth it?
Reclaiming VAT this way requires active participation from your employees. They will need hand in of all of their fuel receipts otherwise the HMRC could deny your claim.
The VAT Fuel Scale Charge is not a one-size-fits-all method. If your staff member’s private mileage tends to be quite low, it may be better for you to account for VAT solely on their exact business mileage instead.
When would it be better to pay staff business mileage alone?
Using Mileage Allowance Payments (MAPs), you could pay staff members only when they use their own vehicle for business-related purposes. These payments can apply to more than one vehicle in a year by adding up the mileages of all the cars used.
There is always an “approved amount” a staff member may claim up to, which can be calculated by multiplying the employees’ annual business mileage by the applicable rate per mile.
The current rates per mile are as follows:
| Type of vehicle | First 10,000 business miles in the tax year |
Business miles in excess of 10,000 in the tax year |
| Car and van | 45p per mile | 25p per mile |
| Motorcyles | 24p per mile | 24p per mile |
| Bikes | 20p per mile | 20p per mile |
For an employee with an approved amount of 15,000 miles, you could pay 45p for the first 1,000 miles – £450 – then 25p for the remaining 5,000 miles – £112.50. That makes a total of £562.50 for the year.
If your staff member goes over their approved amount, you can use form P11D to add the extra mileage allowance to their pay.
If they fall below their approved threshold, they can claim tax relief for the amount left over. You could then report the unused balance to the HMRC. Find out more about the Mileage Allowance Relief Optional Reporting Scheme (MARORS) here.
Claiming back VAT on fuel used in Mileage Allowance Payments
You can also claim back VAT on fuel for Mileage Allowance payments. To work out how much you could reclaim, you need to use the amount you pay per mile:
| Engine size | Petrol | LPG |
| 1400cc or less | 11p | 7p |
| 1401cc to 2000cc | 13p | 8p |
| Over 2000cc | 21p | 13p |
| Engine size | Diesel |
| 1600cc or less | 9p |
| 1601cc to 2000cc | 11p |
| Over 2000cc | 12p |
Multiply this number by 1.2 to find the amount not subject to VAT. Say you pay 21p per mile, this would be 17.5p. The remaining number is your VAT element, so subtract 17.5 from 21p and you’re left with 3.5p.
That means you can reclaim 3.5p for every mile your employee travels. That’s £350 for every 10,000 miles.
So, should you use the Fuel Scale Charge or Mileage Allowance Payments?
It all depends on the kind of car your employee uses and how many miles you expect they will cover.
Consider the Volkswagen Golf S 1.4 TSI 125PS 6spd Manual 5dr.
This is a petrol car with an engine size of 1400cc and 120g/km CO2 emissions.
Paying for both business and personal petrol consumption with the annual Fuel Scale Charge, you could claim back £177.67 in VAT a year.
With the Mileage Allowance Payment scheme, you would only be required to pay business mileage. At a rate of 11p, you could reclaim 1.8p per mile in VAT.
For the first 9,913 miles, the Fuel Scale Charge would allow you to claim back more VAT. Any more miles than that, your company could reclaim more of the VAT under the Mileage Allowance Scheme.
If your staff member drives 20,000 miles in a year, you could claim back £360 of the VAT; significantly more than the Fuel Scale Charge
Get our help
For all matters related to your business and cars, including the Fuel Scale Charge and Mileage Allowance Payment, get in touch with a qualified accountant.