Taxman-approved fuel-only mileage rates changed today. These are the rates that HMRC are happy for employers to use a) to reimburse staff for fuel used for company business that they've paid for and put in company cars, or b) reclaim from staff the cost of company fuel they've used for their own private motoring. But they're also the rates that businesses can use to reclaim VAT on some of the mileage allowances paid to employees and directors.
Employers can pay a mileage allowance of up to 45p a mile, tax-free, when employees use their own car for business. That hasn't changed, it remains 45p.
You can’t reclaim VAT on all of the 45p, but you can reclaim VAT on the part that represents fuel, as long as you retain VAT receipts covering the cost. As fuel costs have increased so sharply, the approved rates - the part of the 45p that the taxman is happy to accept as representing the cost of fuel - have just been increased once more. The new list of rates is here:
http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm
The new rates are to be applied from 1 September. If you're VAT registered, not on the flat-rate scheme, and failing to reclaim VAT on your mileage costs at all, you should start. You can even reclaim some of the VAT you've missed out on in the past - get in touch with us to find out how.