VAT on Approved Mileage Claims / Advisory Fuel Rate

Ltd Co. - So I have totalled up my approved mileage for the last financial year, “paid” it from the Dir Loan Acc and tagged it to the “Approved Mileage Expenses” supplier at 0% VAT.
I have also calculated the VAT input tax based on the appropriate fuel rate(s), how do I claim this on a VAT return?

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If mileage expenses have been paid to employees (including Directors on payroll) for their business related journeys made in either their own vehicle or a company car, you can reclaim VAT on the fuel element of those mileage payments, although a company car, will in most cases include fuel used in private journeys, therefore the VAT fuel scale charge would also need to be taken into account.


See the example below for claiming back the VAT for ‘Approved Mileage Expenses’:


The Advisory Fuel Rate of £0.16 is included in the Approved Mileage Rate of £0.45, therefore the Approved Mileage Rate needs to be reduced by £160.00 (1000 X £0.16) and then added back as gross to calculate the VAT amount, see the example below:

As you can see from the above example, the total amount claimed is still £450.00, with the input VAT being reclaimed.

VAT Receipt:

All employees must supply the employer with fuel receipts totalling at least £160.00 to allow the business to reclaim the VAT detailed in the example above.

Great, thanks for the comprehensive answer!

I’m glad we could help!