BMW i8 image for applying VAT fuel scale charges
Cars with CO2 emissions below attracts lowest VAT fuel scale charge band
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IF YOU’RE registered for VAT and supply fuel to your company car drivers for private use then you need to read on…

The VAT Fuel Scale Charge is a simplified way of recovering the VAT on the private use of company car supplied fuel.

Apply the VAT fuel scale charge if:

  • You provide free fuel to employees and reclaim all of the VAT on such fuel

Do NOT apply the VAT fuel scale charge if:

  • You provide free fuel to employees and do NOT reclaim any of the VAT on such fuel
  • You reclaim VAT only on fuel used for business purposes
  • Your employees fully reimburse their private mileage fuel

You are allowed to reclaim all of the VAT you’ve paid on the fuel provided that you then add back in the VAT (as output tax) on the scale charge appropriate to your vehicle when making your VAT return.

For accounting purposes the VAT due on the scale charge should be included in the total output VAT in box 1 of your return and the VAT exclusive figure in the net total outputs in box 6.

HMRC has included a concession in the regulations. You only need to apply the fuel scale charge if you reclaim the input VAT on your fuel costs where there is private use of the vehicle.

With low mileage the cost of fuel may be less than the scale charge and in which case, it is not worth recovering the input VAT. However, this will apply then to all of your vehicles, including vans, and you must inform HMRC in advance that this is what you intend to do.

Learn more. Go to our VAT on business mileage section

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1 COMMENT

  1. I know how to apply fuel scale charge on vat form by adding vat on scale charge to box1 and adding net figure to box6 but in the software i use when I credit output vat and sales so which account shall I debit. Please help

    I don’t think this is one we can help with – you should consult your accountant and software supplier.
    Ralph Morton, editor

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