VAT Reclaim on Business Mileage Using Advisory Fuel Rates (Ltd Co Director)

Hi All, I'm a single director of a limited company and use my own private vehicle for business travel (i.e. I’m treated as an employee using my own car). I expense business mileage based on HMRC’s Mileage Allowance Payments (MAPs) — currently 45p per mile for the first 10,000 miles. I understand that while the full 45p is an allowable tax-free reimbursement for the employee, the company may be able to reclaim VAT on the fuel portion of the mileage — using HMRC’s Advisory Fuel Rates (AFRs). My vehicle is a 1500cc petrol car, which has a current AFR of 15p per mile. So, for example, if I travel 100 business miles: I would claim: 100 miles × 45p = £45 The fuel portion based on AFR would be: 100 miles × 15p = £15 VAT element on £15 = £15 ÷ 120 × 20 = £2.50 Can the company reclaim this £2.50 in VAT, and if so, is it necessary to keep fuel VAT receipts to support this claim? If not, which VAT rate would I assign to Mileage Allowance Payments (MAPs) expenses, Z0.0%? Appreciate any clarification on this — just want to be sure I’m handling it correctly. Many thanks, James

It is always necessary to hold proof of any input tax claim and so yes, you must hold fuel receipts that confirm that you have purchased fuel, otherwise you could pretend to have made journeys in order to claim VAT you never incurred. Section 9.10 https://www.gov.uk/guidance/vat-on-motoring-expenses-notice-70064#road-fuel-bought-for-business

Hi James,
If a business pays an employee a mileage allowance and this is incurred in the course of business then the company are entitled to claining the VAT element of the fuel portion of the mileage.
Fuel invoices would be kept in order to justify the claim for input tax:
9. Road fuel bought for business.
Thank you.