Can You Claim VAT on Mileage?

Yes, But Only the Fuel Element

If you're VAT-registered and use HMRC's simplified mileage rates (45p/25p per mile), you can reclaim the VAT on the fuel portion of the mileage allowance.

The mileage rate covers fuel, insurance, depreciation, and maintenance — but only the fuel element includes VAT that can be reclaimed.

The HMRC Advisory Fuel Rates

HMRC publishes advisory fuel rates quarterly. These are used to calculate the fuel element of mileage claims. The rates vary by engine size and fuel type.

For example (rates are updated quarterly — check the latest figures on GOV.UK):

| Engine Size | Petrol | Diesel | LPG | |-------------|--------|--------|-----| | Up to 1400cc | 13p | - | 10p | | 1401-2000cc | 15p | 12p | 11p | | Over 2000cc | 23p | 16p | 17p |

The Calculation

1. Multiply your business miles by the advisory fuel rate for your vehicle
2. Calculate the VAT element (divide by 6, since the rate is VAT-inclusive)

Example: You drive 1,000 business miles in a 1600cc petrol car.

• Fuel element: 1,000 x 15p = £150
• VAT reclaimable: £150 / 6 = £25

What You Need

To reclaim VAT on mileage fuel:

• You must be VAT-registered
• You must have fuel receipts covering the fuel used (even though you're using mileage rates for the income tax deduction)
• The fuel receipts must be valid VAT invoices

This is a commonly missed detail — you need fuel receipts even when using the mileage method if you want to reclaim the fuel VAT.

If You Use Actual Costs

If you claim actual vehicle costs instead of mileage rates, you reclaim VAT on fuel (and other VAT-able costs) based on the business proportion of use. The advisory fuel rate method doesn't apply.

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