Are you claiming VAT on mileage?

If not why not?

If you are a VAT registered business using the standard VAT accounting method (not the Flat Rate Scheme) you can claim VAT back on the petrol element of a mileage claim.  Whether it’s the directors or staff members making a claim for mileage, it makes no difference.

To make a claim you have to establish what proportion of the pence per mile is for petrol, don’t panic, there are no detailed calculations needed.  HM Revenue & Customs  have listed the pence per mile for company cars based on the fuel type and engine size, which represents the petrol element.

You will need to ensure staff obtain a petrol/diesel receipt to accompany their expense claim, and the VAT element on the receipt must be greater thank the VAT claimed via their expense claim.

Once you have established the rate applicable to the car , it’s a case of multiplying the rate by the miles travelled to then calculate the VAT on the petrol element of the claim.


Bob travels 376 business miles during the month and claims £169.20 on his expense claim.  Bob’s car is a 1.9 diesel, using the HMRC business mileage rates the petrol element per mile is £0.11.  To calculate the VAT on Bob’s expense claim the calculation would be:

376 miles x £0.11 = £41.36 x 1/6 = £6.89 VAT to claim.


In case you are wondering why 1/6 is used, this is the fraction used to calculate the VAT element of a VAT inclusive figure, try it out with £120 and you get £20.

Although carrying out this exercise on one mileage claim may not reduce your VAT liability significantly, it’s worth bearing in mind that you can go back and reclaim any VAT you’ve not claimed on past mileage claims, which could easily add up to a tidy sum.


Practical points:

  • A VAT receipt for petrol must accompany a mileage claim where VAT is being claimed.
  • It may be a good idea to modify your mileage/expense claim forms so that they automatically calculate the VAT.
  • You can go back and claim the VAT on historic mileage claims, subject to time restraints

If you would like to know more, or would like to speak to us about any other matter, please do contact us.