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Michael Paul Accountants

VAT on mileage

26th October 2014

You are probably already aware that if you use a privately owned vehicle for business use then you can claim a mileage allowance (currently 45 pence per mile for the first 10,000 miles and 25 pence per mile thereafter).

However some people don’t realise that you can also claim VAT on your business mileage.  You can’t claim the VAT on the full mileage rate  but a proportion as set out in the company car fuel rates laid down by HMRC.  This proportion will depend on the engine size and fuel type of the vehicle. The figures given by HMRC are the gross rates so to arrive at the VAT claimable you don’t multiply this figure by 20% (as you would if the figure was net) instead you divide it by 6.

So for example if the vehicle is a 1800 cc petrol car and you travel 8,200 miles during the tax year then the amounts you can claim are as follows.

The gross claim is £3,690 (8,200 @ 45p).

The current advisory fuel rate for the vehicle is 16 pence per mile.  So the VAT which can be reclaimed is £218.67 (8,200 @ 16 p divided by 6).

The net amount of £3,471.33 will then be claimed as a cost in the company’s accounts.

If you have any questions regarding VAT on mileage or any other accounting or taxation matters then please don’t hesitate to contact us.

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