If a VAT-registered business purchases road fuel for business use, but there is also private use an adjustment is required to account for VAT claimed on the private usage of the fuel. This is done by using VAT fuel scale charges to add back a fixed sum as determined by HM Revenue & Customs. As with car and fuel benefit in kind the CO2 band is used to calculate the scale charge.

The scale charges are added to Output VAT on the VAT return.

The charges are updated annually (normally as of 1 May) and the new rates should be applied from the start of the next prescribed accounting period starting on or after 1 May 2015.

Click here for 2015/16 rates.

Click here for 2021/22 rates.

If your mileage is low and therefore fuel costs are low then it may be best not to claim VAT on fuel purchases as the scale charge could be more than the VAT claimed.

Businesses using the VAT Flat Rate Scheme do not have to worry about fuel scale charges as they don’t claim VAT back on purchases and expenses as it is accounted for in the flat rate percentage.

Martin Beckenham
Martin Beckenham

Martin Beckenham runs The Financial Management Centre in Ashford & Maidstone and serves as the head bookkeeper in Ashford and Maidstone. Martin is a Certified Bookkeeper with the Institute of Certified Bookkeepers. He has over 35 years of experience in the Finance and Administration sector, firstly in the Oil Industry and more recently as Head of Statutory Government body.