How to Calculate VAT on Mileage

Value-added tax (VAT) is a tax on services and goods in Europe. If you are a VAT-registered business and you purchase goods or services for your business, you can reclaim the VAT you paid on those items. That includes fuel purchased for your vehicle when used for business purposes. Fuel at the pump is taxed at the standard rate of VAT. As of July 2010, the standard VAT rate was 17.5 per cent.

Figure out how many total miles you drove in your vehicle. This should be in your mileage log. For example, you may have travelled 3,010 miles.

Figure out how many miles you drove for business reasons. This should be listed in your mileage log. For example, you may have driven 2,934 miles for business reasons.

Divide the result from Step 2 by the result from Step 1. In this example, 2934 / 3010 = 0.974750831.

Multiply the amount from Step 3 by the total amount you paid for fuel. For example, if you paid £298 for fuel, then 0.974750831 x £298 = £290.475748.

Calculate the input tax by multiplying your answer from Step 4 by the standard VAT fraction of 7/47: £290.475748 x 7/47 = £43.2623454.

Round your answer from Step 4 up to the nearest pound. £43.2623454 rounded up to the nearest pound is £44.

Tip

Make sure you keep accurate mileage logs. Her Majesty's Customs and Excise (HMRC) requires that you keep accurate logs in order to reclaim VAT on mileage.

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Things Needed

  • Mileage log
  • Fuel-purchase log

About the Author

Stephanie Ellen teaches mathematics and statistics at the university and college level. She coauthored a statistics textbook published by Houghton-Mifflin. She has been writing professionally since 2008. Ellen holds a Bachelor of Science in health science from State University New York, a master's degree in math education from Jacksonville University and a Master of Arts in creative writing from National University.

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