Skip to content

Company car advisory fuel rates and reclaiming VAT

HMRC first published advisory fuel rates in 2002, allowing businesses to reimburse employees for work related travel, or when employees are required to repay the cost of fuel used for private travel, in company cars.

HMRC allows businesses to reclaim the VAT element on fuel mileage allowances, as long as they are close to its own set fuel mileage rates. The rates reflect average fuel costs at the time they are set and are reviewed four times during the tax year – please contact us for the most up to date rates. Employers may continue to use either the previous or new current rates for one month after the date of change.

Businesses wanting to reclaim VAT on mileage must retain the following records:

  • The distance (mileage) travelled, and whether the journey was business or private
  • The vehicles engine size in cc
  • The rate of mileage allowance
  • The amount of input tax claimed.

We can help with reclaiming VAT. Please contact us.