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Advisory Fuel Rates - What is the VAT element of mileage on standard rate?

What are advisory fuel rates?

Advisory fuel rates are the recommended repayment amounts for drivers who are reclaiming the fuel element on their business mileage. This applies to Standard Rate VAT Registered companies only. They are used to calculate:

  • The amount of VAT to reclaim on business mileage in a personal vehicle

  • How much employers can reimburse employees for business travel in their company cars

  • How much employees need to reimburse employers for private travel in their company cars

HMRC reviews these every quarter and revises accordingly.

What’s changed?

From 1st September 2017, HMRC updated the advisory fuel rates as follows:

Engine size

Petrol

Diesel

LPG

1,400cc or less

11p

 

7p

1,600cc or less

 

9p

 

1,401cc - 2,000cc

13p

 

8p

1,601cc to 2,000.cc

 

11p

 

Over 2,000cc.

21p

12p

13p

N.B. Hybrid cars are treated as either petrol or diesel for this purpose

Using the advisory fuel rates above, you can calculate what percentage of the mileage rate applies to fuel and calculate the VAT on that element.

Illustration scenarios

Example 1 - reclaiming VAT on mileage

Jane bought petrol and travelled 100 miles in their personal car with an engine capacity of 2500cc.

Based on an advisory rate of 21p per mile, £21 would be deemed to be attributed to the fuel (out of the overall £45 mileage claim). As this £21 is VAT inclusive (that is, £21 equals 120% of the fuel cost), the VAT element is calculated by dividing the figure by 6: £3.50.

 

Example 2 - paying employer for private fuel in company car

Jack made a round trip of 50 miles to see relatives in their diesel engined company car with 1600cc capacity.

50 miles at an advisory rate of 9p per mile implies Jack will be required to pay £4.50 for the personal trip.

Use the attached spreadsheet to calculate this figure so you know which  line item amounts to put into your Crunch account.

Last Updated: 01 Sep 2017 01:36PM BST
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