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VAT Fuel Scale Charge Advice 2016/17

Are you a VAT registered company? Do you provide fuel for your employees when they use company vehicles? Do you or your employees use these vehicles for personal and business use?

If so you are able to recover VAT on fuel used for business purposes via input tax and then account for the VAT applying to private use using fixed charges outlined below.  You simply add the appropriate charge to your output tax.

How Fuel Scale Charges work

The VAT Fuel Scale Charge System is a simplified way of taxing the private use of motor fuel. You can reclaim all VAT paid on fuel (used for both private and business purposes) as input tax. You then add the appropriate fuel scale charge to your output tax which takes into account the VAT claimed on the privately used fuel. 

The VAT Fuel Scale Charge allows you to pay VAT on private usage without the need to keep a record of the precise miles used for both private and business mileage however we would suggest that you still monitor mileage and it could be that the fuel scale charge is more than the VAT reclaimed. 

When the Fuel Scale Charges must apply

VAT Fuel Scale Charges apply when the entire amount of VAT you pay on fuel is reclaimed via your input VAT. An output VAT charge is then made via the VAT Fuel Scale Charge. It also follows from this that if your company vehicles are not used for private usage, there's no need to consider Fuel Scale Charges.

Making sense of the Fuel Scale Charges table

Below is a table listing the VAT Fuel Scale Charges applying from 1 May 2016. You will need the vehicle’s CO2 emissions and then the table states the amount of VAT due on a monthly, quarterly or annual basis in accordance with your VAT periods.

Click here if you do not have this information to hand. Simply enter in your vehicle registration and the DVLA's system will reveal the correct emissions for your vehicle.

Then simply use the table below to match your emissions figure to the amount of VAT due.

Description of vehicle: vehicles CO2 emissions figure VAT inclusive consideration for a 12 month prescribed accounting period VAT inclusive consideration for a 3 month prescribed accounting period VAT inclusive consideration for a 1 month prescribed accounting period
120 or less 536 133 44
125 802 200 66
130 857 213 70
135 909 227 75
140 965 240 80
145 1016 254 84
150 1072 267 88
155 1123 281 93
160 1179 294 97
165 1231 308 102
170 1286 320 106
175 1338 334 111
180 1393 347 115
185 1445 361 119
190 1501 374 124
195 1552 388 129
200 1608 401 133
205 1660 415 138
210 1715 428 142
215 1767 441 146
220 1822 455 151
225 or more 1874 468 155

How to use the above table

If you submit your VAT return every year, refer to the charges in column two. If you submit your VAT return every 3 months, refer to the charges in column three. If you submit your VAT return every 1 months, refer to the charges in column one. Then add this figure to the output box (box 1) on the VAT form.

When to avoid VAT Fuel Scale Charges

If your fuel costs are low, you may wish to avoid VAT Fuel Scale Charges. Why? Because the Fuel Scale Charges will be greater than the VAT you wish to reclaim, effectively resulting in a loss. However, if you elect to not utilise the Charges, you must follow this policy for all of your company vehicles. You cannot 'cherry pick' different rules for different vehicles in order to avoid paying tax.

Further information

For further information and help you might find the following links useful:

Getting help

If this confuses you, why not opt for The Financial Management Centre's affordable and reliable VAT return service. This service is inclusive of Road Fuel Scale Charges.

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