VAT on mileage claims

Hi,

VAT can be claimed under mileage under HMRC. If you view this guide:

http://www.hmrc.gov.uk/manuals/vitmanual/vit55400.htm

Scroll down to 'Input tax when employees are paid a mileage allowance'. It shows you the method that Clearbooks uses based on the following rates:

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

If you set the drop down to HMRC it will calculate it automatically which some of our clients choose to do so.

I would appreciate a bit more clarity on this. I think that the VAT applies to mileage on company cars, in which case HMRC should be selected from the drop down menu and VAT will then be calculated on the mileage claim.

For drivers using their own cars, a rate of 45p is the HMRC rate. I understood that this is outside the scope of VAT. Can someone put me right on this one please.

It is not possible to enter a mileage claim on clearbooks that is outside the scope. All that I can see is the option to set to manual and input a vat amount of zero.

I

A company can claim VAT back on employee mileage. Just ensure the employee submits fuel receipts that have enough VAT on them to cover the claim.

^^^ To clarify, that means employee business mileage when using their own car.

Hello Kevin, thank you very much for the response. Drilling down, does that mean that a mileage claim of £120 includes £20 reclaimable vat?

Hi Rose

If only it were that easy! I'm just packing for my holidays so will struggle to explain right now, if I get a spare 20 mins later I'll put something together.

Hi Rose,

This is indeed a very complex area and I hope Kevin can shed a little light on it from an expert point of view. But, this is what HMRC say about what you can and cannot reclaim http://www.hmrc.gov.uk/vat/managing/reclaiming/reclaim.htm I hope it sheds a little light on the issue for you.

Chris