Peony

Hello, Please can you provide some clarification in regards to mileage on company cars. According to the advisory rates (https://www.gov.uk/guidance/advisory-fuel-rates), the rate for fully electric cars is 10 pence per mile (from 1st Sept 2023). Does this mean that the employee driving the electric company car can only be reimbursed at 10p per mile on their expense claim? Also, is there any input tax that the employer can reclaim for this or is it zero rated VAT on the accounting side? Thanks,

The guidance you have referenced above relates to when fuel is purchased by employees. However, the guidance also states that for Input tax when employees are paid a mileage allowance (which is what we are paying them at 45p per mile) then these rules apply: Input tax is calculated by multiplying the fuel element of the mileage allowance by the VAT fraction (VAT rate divided by 100 + VAT rate). The allowance paid to employees must be based on mileage actually done. Business records must be kept to back this up. The business must retain records for each employee claiming a mileage allowance to show: • the mileage travelled; • whether the journey is both business and private; • the cylinder capacity of the vehicle; • the rate of mileage allowance; and • the amount of input tax claimed. HMRC officers may check what rates employers have used to calculate claimable input tax on the fuel element of mileage allowances paid to their employees. Current rates as published by motoring associations such as AA or RAC are generally acceptable. HMRC will also accept HMRC’s own advisory rates which are published twice a year and can be found at Company Cars - advisory fuel rates. Some employers cap employees to a particular level of allowance. For example, the employer may decide that employees with cars with engines over 2000cc will receive only the rate paid for vehicles between 1400 and 2000cc. If this happens HMRC will only allow input tax recovery on the mileage rate that the employer has paid to the employee. This guidance does not mention anything about having employee fuel receipts?

Input tax when employees are paid a mileage allowance does not say anything about fuel receipts? It says employers must keep records of: the mileage travelled; whether the journey is both business and private; the cylinder capacity of the vehicle; the rate of mileage allowance; and the amount of input tax claimed. Therefore please can you confirm if a fuel receipt is needed or not?

HMRC Admin please could you respond in regards to fuel receipts. Do we need to have fuel receipts from every single employee that claims for mileage if we use the advisory fuel rates to calculate the fuel element for input tax? Thanks,

Thank you for your response . The only part I'm confused about is the employees providing a fuel receipts. So if an employee does not buy fuel because they have enough for the business journey in the tank. Does that mean the next time they fill up they have to give us a copy of their fuel receipt, even though it's unrelated to that particular business journey and the date on the receipt will not match up with their expense claim form. If we do not get a VAT fuel receipt from the employee does that mean we cannot claim the fuel element of VAT on the 45p? If so, would we have to go back retrospectively and update our accounting records to reflect zero input VAT because we couldn't get fuel receipts? Thanks

Name Removed admin .

If an employee claims expenses for using their own vehicle and the employer pays them at 45p per mile, how much of that 45p, if anything, can the employer reclaim VAT? The employer is a VAT registered company. For reference I'm referring to these rules regarding the 45p - https://www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances/travel-mileage-and-fuel-rates-and-allowances#company-cars I contacted HMRC on the phone and they sent me here: https://www.gov.uk/guidance/advisory-fuel-rates. However those rates only apply to employees using a company car and it actually states that very clearly that 'You must not use these rates in any other circumstances.'