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If you’re familiar with The Fuel Store, then you’ll know that one of the things that we are proud of is the fact that our fuel cards can help make VAT claims simple – thanks to our HMRC-compliant invoices. Here, we explore what that means in practice, the basics of VAT when it comes to fuel, and how Fuel Store customers stand to benefit.
Reclaiming VAT on fuel – the basics
To reclaim VAT on business expenses, including fuel, you need to be a VAT-registered business. If your annual taxable turnover exceeds £85,000, VAT registration is mandatory. If it is below that figure, however, you can opt to register for VAT and claim VAT back on expenses.
There are specific conditions and requirements for businesses to claim VAT on fuel bills. First and foremost, the fuel must be used for business purposes. In addition, businesses must keep detailed records of mileage, including dates, distances, and purposes of journeys, as well as VAT receipts for fuel purchases.
Simplifying HMRC compliance for fuel spend
When managing a fleet, processing mileage claims and keeping track of VAT receipts can be an administrative headache.
One of the simplest ways to minimise this admin is by supplying your drivers with a fuel card (more in our What is a Fuel Card blog). Every fuel card comes with free access to our online portal. As well as providing a breakdown of fuel spend – including which card was used, where, and when – the portal gives users access to HMRC-compliant fuel invoices.
Having access to HMRC-compliant invoices can take the pain out of VAT claims. No more keeping receipts. No more searching for lost ones. No more scanning and processing individual, screwed-up bits of paper. Not only that, but they are available for download from the portal, making it easier to comply with HMRC’s requirements when it comes to keeping receipts (as a rough guide, that’s five years for sole traders and six years for limited companies).
As well as eliminating unnecessary admin, using the invoices associated with your business fuel cards can also help you save money by claiming back all of the VAT against your fuel costs.
I’m a sole trader; can I reclaim fuel costs?
Sole traders can claim fuel costs as part of their business expenses. Current mileage allowances are 45 pence per mile for the first 10,000 business miles and 25 pence per mile thereafter. To process a mileage claim, sole traders also need to provide receipts.
Having a fuel card comes in handy here too; all invoices are stored in the portal, making it simple to access the paperwork to process your claim. In addition, there is no chance you can lose any receipts for fuel, which means you’ll always be able to reclaim any fuel VAT that’s owed to you.
What about personal mileage?
You can make a claim for only the fuel you use for company purposes. For vehicles such as pool cars, commercial vehicles, or plant machinery, keeping an accurate mileage record is simple; all fuel will have been used for business purposes.
However, if a vehicle is used for both business and personal use, keeping accurate records becomes even more important. In this instance:
- The company can reimburse the employee at the advisory rate for business mileage and reclaim VAT on the payment.
- The company can cover the fuel cost, then charge the employee for private mileage, reclaiming VAT on the fuel cost minus the employee’s contribution.
- Any company paid fuel (which is not recharged) will be treated as a benefit in kind and, as such, must be reported on an employee’s P11D.
However you approach personal mileage, having accurate records and access to HMRC compliant invoices helps to simplify the process.