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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4203
Experience:  FCCA FCMA CGMA ACIS
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Hi Have a small business - VAT registered - trying to calculate

Customer Question

Hi
Have a small business - VAT registered - trying to calculate claimable VAT on 2031 miles - is there a formula
Many thanks
Vivianne
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.

Hello Vivianne, I'm Keith and happy to help you with your question.

However, I do need a trifle more data. There is a danger of mixing Income Tax and VAT as it stands at present.

Could you please expand upon 'claimable VAT on 2031 miles?' Also are you operating your business as self employed?

Once I have this information I will be able to assist you further.

Customer: replied 3 years ago.

I realise I can claim .45p per mile but only a percentage is VAT claimable against fuel. Not sure how to calculate that figure

Yes I am the sole employer of my company.

Many thanks

Expert:  bigduckontax replied 3 years ago.
The claim of 45p per mile is an Income tax claim method commonly used. The claim is made on your annual self assessment tax return. If you company pays you a mileage allowance, you can only claim the difference between what the company pays you and the 45p on your personal tax return. This rate is designed to compensate for all running and capital costs of operating your private vehicle on business. VAT does not come into the equation at all.
As far as your company is concerned, I assume that it is a limited company, then the payment of a mileage allowance to employee is outside the scope of VAT and you should not be putting any vehicle bills through the company account at all. That would be double counting a charge and could, on investigation, lead to charges of tax evasion, a criminal offence.
Now, have I got this right, you are an employee of your limited company? If I have then my answer stands. Otherwise I will have to advise further.
Customer: replied 3 years ago.

It is a limited company and I am its only employee, I have been let to believe if I use my car on company business I can claim VAT on at percentage of the .45 p for fuel

Many thanks

Expert:  bigduckontax replied 3 years ago.
Indeed you can. Here is an helpful example from TMT Accounting:
'So, if we had an employee who had a car with a 1400cc petrol engine, the fuel portion of the 45/25 mileage rate is 15 pence per mile (August 2013):
15 pence per mile represents 120% (100% plus 20% VAT - stay with us)
Therefore 20/120 multiplied by the 15p is 2.5 pence per mile. So for each mile that you pay that employee, you can claim back 2.5p in VAT.'
If you pay 45p per mile then 45 x 20 / 120 = 7.5p per mile to put through the VAT account as an input tax. Be careful to retain receipts to cover the level of VAT reclaimed. HMRC could call for these in the event of an investigation.
Customer: replied 3 years ago.

thank you I have kept all petrol receipts and mileage logs.

every website quotes a different figure for a 1400cc petrol engine so got confused.

Many thanks

Vivianne

Expert:  bigduckontax replied 3 years ago.
Delighted to be of assistance.
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.