Director uses his own car to travel to see customers, suppliers. Can the company claim the VAT on his petrol receipts? or just reimburse the amount on the receipt with no VAT input?
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Yes - sort of...
As a director of the company he is an employee and so he should be claiming his mileage in accordance with the advisory fuel rates on business mileage.
If he does that he can also reclaim the VAT input on the payment.
See here: http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm
Not quite
As he is using his personal car for company business, he should be claiming his mileage from the company at the approved rates of 45p for the first 10,000 business miles, then 25p. More tax-deductible expense for the company, but no taxable income for the employee.
The company can then reclaim VAT on the fuel element of the 45/25p at the lower advisory fuel rates which are inclusive of VAT - so it would be 3p of VAT out of 18p for a petrol car of 1401 to 2000cc or a diesel car over 2000cc - provided that it holds sufficient VAT receipts to cover the total input tax claimed.
I think you're both right
For the company to claim the VAT, it must reimburse the director and it must have a VAT receipt, but the amount of reimbursement can be any amount (but you can then only claim VAT on the lesser of the rate reimbursed and the relevant advisory fuel rate). If rate reimbursed is above 45p per mile, the excess is taxable (as a BIK) and NICable ('ees and 'ers through payroll) and if the rate is above 25p after the first 10,000 miles it's taxable (as a BIK). :)
Am I doing it right...??
I keep a mileage log and all fuel receipts, and recover a %age of the VAT that directly relates to the business mileage driven. And claim the 45p per mile as well.
So.... 100 miles personal and 200 miles business.... £30 fuel incl VAT
33% personal
67% business
200 x 45p expense claim = £90
Total VAT £5 - 67% is business = £3.35
When I process my expense claim, I record £16.75 gross (in Sage) with a VAT code of T1 - reclaiming the VAT of £3.35 and £73.25 with a VAT code of T9 - outside the scope of VAT. Total expense claim = £90 - charge to overheads = £86.65 plus VAT £3.35
Mileage records and VAT receipts all stored safely.
Does that sound right????????
No - you are not doing it right
What part of the above replies do you not understand?
Assuming that it is your own car and no costs are being charged to the business in any other way, you can claim a mileage allowance of £90 for 200 business miles at 45p.
The VAT recovery depends on the size and type of engine in your car. If the advisory fuel rate is 18p for your car, you can claim back the VAT included in £36 (200 business miles at 18p), which is £6, not just £3.35.
I hate the complexities of Sage, but it seems to me that you should be processing £36 gross on VAT code T1 and the balance of £54 on T9.
Euan MacLennan.... I AM right
Have finally got 5 minutes in a crazy schedule to look this up - there are a couple of options for reclaiming VAT on fuel, and the method I'm using is one of those.
sue.hill.....no you are not!
The mileage rate of 45p includes fuel.
You are, therefore, reclaiming the VAT on the fuel twice.
No I'm not
The 45p a mile is reimbursement from the company to me. The company is therefore "paying" VAT as an element of that - I agree. The reclaim as proportioned in the expenses is applicable.
Claiming mileage allowance and input VAT
Is it possible for an employee of a company to claim the 45p a mile allowance and for the company to then claim input tax for the petrol? If so, how does this work?
I have no problem with the 45p a mile claimed (up to 10k miles pa for business mileage) but how does the company then reclaim input tax because surely petrol receipts will not be claimed by the employee because the mileage allowance has already been claimed?
Or can the company also claim the petrol back which its employees have used on company business?
Is this legal? Surely there is a double hit on profit here? Are HMRC in agreement with this?
If so what are the machinations of how this works?
Also would you know if the business was a transport business and fuel repayment was made. Historically it seems T9 VAT code has been used but recently a bookkeeper used T0 who was doing the books before me.
Can anyone please tell me what VAT code i should use.
Thank you