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How to calculate VAT on Mileage for Ltd companies

ketskets New MemberRegistered Posts: 5
Hi Guys,

Can you please tell me how I can claim VAT on mileage claim for Ltd companies. I know that vat can only be claimed on number of mileage but not sure how to calculate.

Many thanks

Kets

Comments

  • readerreader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    If Mr A Smith of Mr A Smith Ltd has done 3,000 business miles in his petrol-consuming personal car with engine size 2,000 cc during the period 01/01/2012 - 31/03/2012 he is entitled to claim input VAT of:

    Input VAT on mileage = Business miles x Advisory fuel rate x VAT Fraction
    = 3,000 bus. miles x 0.18* x 1/6**
    = £90

    *The relevant advisory fuel rate (depends on type of fuel used and engine size) can be found using the link below:

    http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

    **If you are making a retrospective claim going back 4 years because you have never claimed VAT on fuel/mileage the relevant VAT fractions are:

    2011: 1/6
    2010: 7/47
    2009: 3/23
    2008: 7/47

    However if you're going to make this type of retrospective input VAT claim VAT inspectors would probably expect to see mileage records and evidence (fuel receipts or bank statements) going back 4 years. Also, if you do go back 4 years make sure you use the advisory fuel rate of the time rather than this tax year's advisory fuel rate.
    MarieNoelle
  • ketskets New Member Registered Posts: 5
    Hi Reader,

    Many thanks, I won't be making any claim for previous years and I have asked client to keep records.

    thanks again

    Kets
  • groundygroundy Trusted Regular Registered Posts: 495
    We just use 3p per mile as the VAT element and have had this accepted on several clients VAT visits
  • jamesm96jamesm96 Experienced Mentor Registered Posts: 523
    Here's the section on the VAT Input Tax Manual which I found quite useful:

    http://www.hmrc.gov.uk/manuals/vitmanual/VIT55400.htm
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    I'm suddenly stuck by this! what's the current fraction rate for 2015/2016? Can't easily find information since HMRC has changed into Gov.uk...

    example I have 970miles at 0.45p= £436.50, is it this the vatable amount where I'm going to get the input VAT? £436.50*20/120=£72.75 vat?

    thanks
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,431
    Hi

    Fuel rates can be found here:
    https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-december-2015

    If the car as a petrol engine of >2000 cc the fuel element is 20p per mile and the VAT is 1/6 so in your example 970 x 20p/6 is the Vat that can be reclaimed (this is the rate from 1 dec 2015 so you will have to find the correct rates for previous period).
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    edited February 2016

    Hi

    Fuel rates can be found here:
    https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-december-2015

    If the car as a petrol engine of >2000 cc the fuel element is 20p per mile and the VAT is 1/6 so in your example 970 x 20p/6 is the Vat that can be reclaimed (this is the rate from 1 dec 2015 so you will have to find the correct rates for previous period).

    Thanks Marie however the HMRC link says "These rates only apply to employees using a company car" which is not my case as the company does not have a car and employees are using their own one. So where are the rates for this? :-(

    Currently I'm calculating mileage 0.45p up to 10,000 miles and I have £1800 worth of fuel receipts however I have no idea how to calculate VAT and business portion. I wish Gov.uk make this much clearer!

  • burgburg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,441
    HMRC advise that the portion of the Mileage rate (45p/25p) that is actually fuel is those as per the Advisory Fuel Rates. Therefore use the Advisory Fuel Rates to work out the VAT element that is included. If the advisory fuel rate gives a fuel amount of 20p then of the total 45p per mile claim only VAT can be accounted for on 20p of this.
    Regards,

    Burg
    MarieNoelle
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    edited February 2016
    burg said:

    HMRC advise that the portion of the Mileage rate (45p/25p) that is actually fuel is those as per the Advisory Fuel Rates. Therefore use the Advisory Fuel Rates to work out the VAT element that is included. If the advisory fuel rate gives a fuel amount of 20p then of the total 45p per mile claim only VAT can be accounted for on 20p of this.

    so I have to do 2 calculations, depends if I'm using Mileage or fuel receipts?
    1. Example if I have been given Mileage 7500 at 0.45= £3375 and I calculate 20% on this amount?
    2. instead if I have been given fuel receipts totally £1800, I have to calculate 20p on it = £360 and then 20% VAT?
    :s
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    I have just found this article which is very clear http://www.caseron.co.uk/cant-i-just-claim-for-the-fuel-receipt/

    however I still don't know how to get to the mileage figure from a bag of fuel receipts...should I just assume based on this example found in HMRC manuals:

    Use detailed mileage records to separate the business mileage from the private mileage

    This option would be used if the business does not wish to apply scale charges. Detailed records must be kept to demonstrate that only the business element of the VAT charged on fuel has been treated as input tax.

    For example; records show that the total mileage is 4,290, of which 3,165 is business mileage. The total cost of the fuel was £368.
    •The cost of the business mileage is £368 x 3,165 / 4,290 = £271.49
    •The input tax is £271.49 x VAT fraction (VAT rate divided by 100 + VAT rate)
    •The cost of the private mileage is £368 x 1,125 / 4,290 = £96.51

    If a business applies other calculations HMRC may check them to ensure that only the element of VAT on fuel relating to business use is claimed.

  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,431
    This is perfectly acceptable if you know the total mileage of the car. However if you only have the business mileage you can use the fuel rate as discussed above. Remember that the 45p covers not only the fuel but also the costs of running the car. But you can only claim the VAT on the fuel element (given in the HMRC tables) provided that receipts are kept.
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