What is the VAT fuel scale charge? What alternatives are there to the VAT fuel scale charge? Does the VAT fuel scale charge apply to vans?

If a business recovers VAT on road fuel, it will have to account for output VAT when a car it has provided to an employee (or the sole proprietor or partnership) is put to private use.

The VAT fuel scale charge

To simplify accounting for VAT on the private use of fuel, a business can choose to apply the VAT fuel scale charge. This adds back a fixed sum, per VAT period, to account for private consumption of fuel purchased by the business.

The scale charge is calculated according to a car's CO2 emissions and the fixed charge is added to output VAT, on the VAT return.

One scale charge must be used for each car that is put to private use.

The European Commission has confirmed that the UK can Continue to use the fuel scale charge until at least 31 December 2020.

Alternatives to the VAT fuel scale charge

It may not be worth paying the VAT fuel scale charge, particularly if private mileage is very low. The alternatives are as follows:

  • The business can account for VAT based on exact business mileage, and therefore it will not claim VAT on any private mileage.
  • It may pay a mileage allowance for exact business miles travelled and reclaim back VAT on that: HMRC publish approved Advisory Fuel Rates, which can be used to calculate the payments and the recoverable VAT.
  • A business may decide that it will not reclaim any VAT on fuel costs (this is where business mileage is very low and private mileage is high).

Tax traps: Mileage payments

If you want to recover output VAT based on mileage payments made to employees, you must still ensure that employees submit fuel VAT receipts, proving that they have incurred costs and VAT on fuel. Without fuel receipts, HMRC may deny the VAT recovery on mileage reimbursements.

If you reimburse mileage at 45p and 25p, where employees use their own car, you cannot recover VAT on 45p/25p as this is supposed to represent the full cost of using the car: including depreciation, fuel, insurance etc.

Instead, you would only be able to recover VAT on the fuel element, using the advisory fuel rates or calculating your own fuel mileage rate, which would be subject to HMRC scrutiny.

Vans and commercial vehicles

It is assumed that the drivers of most commercial vehicles undertake little or no private mileage. If there is a significant level of private mileage VAT claims should be adjusted to exclude VAT on this. The fuel scale charge can only be used for cars.

The VAT Flat Rate Scheme

If a business is using the VAT Flat Rate Scheme no VAT is claimed back on fuel and no scale charge is required, as input VAT is automatically adjusted using the flat rate percentage.

Annual VAT scale charge rates

Accounting periods beginning on or after:

1 May 2020

CO2 emissions figure

12 month VAT period

3 month VAT period

1 month VAT period

120 or less

£581

£144

£48

125

£870

£218

£72

130

£930

£231

£76

135

£986

£246

£81

140

£1,047

£261

£87

145

£1,103

£275

£91

150

£1,163

£290

£96

155

£1,219

£305

£101

160

£1,279

£319

£106

165

£1,335

£334

£111

170

£1,396

£348

£115

175

£1,452

£362

£120

180

£1,512

£377

£125

185

£1,568

£392

£130

190

£1,628

£406

£135

195

£1,684

£421

£140

200

£1,745

£436

£144

205

£1,801

£450

£149

210

£1,861

£464

£154

215

£1,917

£479

£159

220

£1,977

£493

£164

225 or more

£2,033

£508

£168

 1 May 2019

CO2 emissions figure

12 month VAT period

3 month VAT period

1 month VAT period

120 or less

£592

£147

£49

125

£886

£222

£73

130

£947

£236

£78

135

£1,004

£250

£83

140

£1,066

£265

£88

145

£1,123

£280

£93

150

£1,125

£295

£98

155

£1,241

£310

£103

160

£1,303

£325

£107

165

£1,360

£340

£113

170

£1,421

£354

£117

175

£1,478

£369

£122

180

£1,540

£384

£128

185

£1,597

£399

£132

190

£1,658

£414

£137

195

£1715

£429

£143

200

£1,777

£444

£147

205

£1,834

£458

£152

210

£1,895

£473

£157

215

£1,952

£487

£162

220

£2,014

£502

£167

225 or more

£2,071

£517

£172

 

External links

1 May 2018 

1 May 2017  

1 May 2016  

1 May 2015  

1 May 2014

1 May 2013

1 May 2012

1 December 2008 to 30 April 2012

Comments (0)

Rated 0 out of 5 based on 0 voters
There are no comments posted here yet

Leave your comments

  1. Posting comment as a guest.
Rate this post:
Attachments (0 / 3)
Share Your Location