Can You Claim VAT on Mileage? UK Business Guide

Mileage claims are a normal part of running a UK business. Directors and employees often use their own vehicles for client meetings, site visits and travel between business locations.

But one question comes up all the time: can you claim VAT on mileage?

The answer is yes, but only on the fuel element, and only if you follow the HMRC mileage VAT rules properly.

Can a VAT-registered business reclaim VAT on mileage?

Yes. A VAT-registered business can reclaim VAT on mileage reimbursements, provided:

your business is VAT registered
the mileage is for genuine business travel
you claim VAT only on the fuel element
you keep the right evidence, including VAT fuel receipts

If your business is not VAT registered, there is no VAT to reclaim. If you are on the VAT Flat Rate Scheme, separate mileage VAT recovery is usually not available under the normal rules, so you should take advice before claiming.

Why you cannot reclaim VAT on the full mileage rate

Many businesses reimburse mileage using HMRC’s approved mileage allowance payments (AMAP). These rates are designed to cover the full cost of running a vehicle, not just fuel.

That means the mileage rate includes things like insurance, servicing, repairs, depreciation and general wear and tear. Only the fuel element carries VAT, so you cannot reclaim VAT on the full mileage rate.

How to calculate VAT on mileage

The most practical method for most businesses is to calculate VAT using HMRC Advisory Fuel Rates. These rates estimate the fuel cost per mile, based on engine size and fuel type.

You can find the latest HMRC Advisory Fuel Rates here:

HMRC Advisory Fuel Rates (GOV.UK)

Step 1: Identify the Advisory Fuel Rate

Choose the correct rate for the vehicle type and engine size for the period you are claiming for.

Step 2: Multiply by business miles

Multiply the advisory fuel rate by the number of business miles reimbursed.

Step 3: Extract the VAT

Because the fuel cost is VAT inclusive at 20%, you can extract the VAT by using the VAT fraction (divide by 6).

Example VAT mileage calculation:

1,000 business miles
Advisory Fuel Rate: 12p per mile
Fuel total: 1,000 × £0.12 = £120
Reclaimable VAT: £120 ÷ 6 = £20

What records do you need to claim VAT on mileage?

For VAT on mileage UK claims, record keeping is not optional. To support your VAT return, you should keep:

a mileage log showing date, start and end location, and business purpose
the number of business miles claimed
VAT fuel receipts (showing VAT charged)
evidence of reimbursement paid to the employee or director

Without VAT fuel receipts, HMRC can disallow the VAT claim even if the mileage log is perfect.

Is commuting eligible for VAT mileage claims?

No. Travel between home and a permanent workplace is ordinary commuting and does not qualify as business mileage for VAT purposes.

Typical qualifying journeys include client visits, site visits, supplier meetings and travel between temporary workplaces.

Can directors claim VAT on their own mileage?

Yes. The same principles apply. If the company reimburses the director for business mileage and the company is VAT registered, the company can claim VAT on the fuel element with the correct records and receipts.

Common mistakes when reclaiming VAT on mileage

claiming VAT on the full mileage rate instead of the fuel element
missing VAT fuel receipts
including commuting as business travel
using the wrong Advisory Fuel Rates for the period
poor mileage logs that do not show business purpose

How RiverView Portfolio can help

If you are unsure whether your current process is correct, a quick review can identify missed VAT recovery and reduce compliance risk.

Find out more about our tax support here:

RiverView Portfolio Tax Services

FAQs: Claim VAT on mileage

Can sole traders reclaim VAT on mileage?

Yes, if they are VAT registered and the mileage is for business travel, with proper records and VAT fuel receipts.

Do you need fuel receipts if you use Advisory Fuel Rates?

Yes. Fuel receipts are required to support VAT recovery.

Can you claim VAT on mileage for electric vehicles?

Electric vehicles are different because there is no petrol or diesel fuel purchase. The VAT treatment depends on how electricity is purchased and reimbursed, so get advice if this applies to you.

What happens if HMRC disallow the claim?

HMRC can require repayment of the VAT, plus interest and potentially penalties if the error is considered careless.