VAT on Mileage
HMRC allows drivers to claim up to 45p per mile, for up to 10,000 miles and 25p per mile over 10,000 miles. The business can recover the VAT on the cost of the fuel portion.
The mileage allowance covers the cost of both:
- Fuel, and
- Wear and tear of the vehicle.
The cost of the fuel is defined by HMRC’s Advisory Fuel Rates. and these are revised quarterly.
How to calculate the VAT on mileage:
- Calculate Fuel Portion = advisory fuel rate x business miles claimed
- Calculate VAT = fuel portion / 6
A standard petrol car of 1600cc, doing 10,000 miles, you can save £230 a year.

Based on advisory rates from 1 December 2024.
Electric cars
Electric cars use the Advisory Electric Rate, not the Advisory Fuel Rate and VAT still at 20%.
Fed up with filling out mileage claims?
Do you currently have a long winded or time-consuming expense claim system? Automating the process with apps such as Xero expenses or Dext eliminate the paper chasing that typically comes with expense claims, while also making expense tracking easier.
Need to track your mileage?
Dext now has a new feature for mileage claims. It automatically calculates reimbursements with journey data—distance, tax rates, fuel allowances and more. Submit, approve and publish claims to accounting software for faster reimbursement.
Run out of milk in the office?
Apps such as Pleo, can replace the need for petty cash or shared credit cards with a simpler solution. A contactless card that is topped up as and when required, you can benefit from 2 cards for Free. Trust your team without compromising on control, offering individual spend limits, built-in controls, automated receipt capture and much more.
Fuel scale charge
If you use your own car for business, then HMRC allows you to claim all the VAT back on fuel, if you pay them a fuel scale charge for the vehicle. This is basically a tax the company pays for the personal use of the car through your VAT return. It is an easy method for claiming VAT on fuel because you don’t have the administrative burden of keeping mileage records of every business trip made.
Use the HMRC tool to work out your VAT fuel scale charge.