VAT man offers refund to business fuel users
Date of Issue: 28th April 2008
The Chancellor has at last made his long awaited announcement on the future of Capital Gains Tax.
Business Advisors and Chartered accountants, Bates Weston clarify how business owners
can reclaim VAT input on business fuel purchases.
Have you noticed how much more it costs to fill your tank these days? A year ago crude oil was trading at $70 a barrel, today the price is marginally over $100 a barrel.
Whilst some of this increase is no doubt due to a weakening dollar, fuel is costing more. In the UK the current, average price of unleaded fuel is 108p, a year ago the price was 90p – an increase of 20% in just one year!
Surprisingly many businesses are still unaware that it is possible to recover the VAT element of fuel for business purposes. This includes the notional VAT included in mileage expenses paid to employees.
Wayne Thomas of Bates Weston, comments:
“Businesses pay for vehicle fuel as a direct purchase by the firm, or by reimbursement to employees, usually via a mileage based expense claim. In both cases it is possible to reclaim the VAT input tax attributed to genuine business journeys.
When fuel is purchased directly by the business the more effective way to recover the VAT element is to log business to private mileage for each vehicle, and claim back VAT in the same proportion.
It is also possible to reclaim all the VAT on fuel purchases and at the same time pay back to the VAT man a fee based on the engine size and fuel type of each vehicle. This can be costly especially when vehicles have low annual usage.
If employers pay a fixed mileage rate for the business use of employee’s cars, H M Revenue & Customs have published a table of rates per mile that can be applied to work out the fuel element. For instance if an employee driving a 1.9 diesel claims for 2000 business miles, you could recover 2000 miles at 11p (the agreed rate per mile for the vehicle) multiplied by the appropriate VAT fraction – currently 7/47. In this case the VAT reclaimed would be £32.76. (2000 x 11p x7/47). To make a claim your employees will need to attach a petrol receipt that covers the purchase of fuel at the time the journey is made.”
It would appear that a little research may be the order of the day to ensure that you are reclaiming the maximum VAT to which you are entitled. If you need help Wayne Thomas can be contacted for more advice on any of the above issues , telephone number 01332 365855 email waynet@batesweston.co.uk.
For further details, please contact:
Bridget Charlton, Marketing Manager
Email: bridgetc@batesweston.co.uk
or telephone 01332 365855
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