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Where Taxpayers and Advisers Meet

Sole Trader VAT on Fuel

CG
Posts:202
Joined:Wed Aug 06, 2008 3:33 pm
Sole Trader VAT on Fuel

Postby CG » Tue Jun 04, 2019 5:35 pm

I am advised that a sole trader can deal with the VAT charged on the fuel in one of four ways:

Reclaim all of the VAT. You must use the fuel only for business purposes.

Reclaim all of the VAT and pay the appropriate fuel scale charge - this is a way of accounting for output tax on fuel that your business buys but that's then used for private motoring.

Reclaim only the VAT that relates to fuel used for business mileage. You'll need to keep detailed records of your business and private mileage.

Not reclaim any VAT. This can be a useful option if your mileage is low and also if you use the fuel for both business and private motoring. If you choose this option you must apply it to all vehicles including commercial vehicles.


I was not aware that the third option was available - does that point mean for each VAT quarter you can work out business mileage and apply that to the total fuel purchased and reclaim that percentage of the VAT?

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Sole Trader VAT on Fuel

Postby robbob » Tue Jun 04, 2019 6:07 pm

I was not aware that the third option was available - does that point mean for each VAT quarter you can work out business mileage and apply that to the total fuel purchased and reclaim that percentage of the VAT?
Thankfully no one in their right mind uses the fourth option despite the hmrc spin on things
Not reclaim any VAT. This can be a useful option
Yeah right is useful not to claim any vat back that you entitled to.

Oops back on track - yes option 3 is fine and hmrc publish approved rates that can be used - so if you have mileage log detailing 100 business miles and rate is 13p its simply 100 * 13p * 1/6 = £2.17.
You have options to use your own fair calcs if fuel costs more than the approved rates providing your calcs are reasonable - that's probably a "not so useful option" albeit if you have total fuel costs and business and private miles totals to hand then its probably not too much extra work at all using those calcs if they come out better.

https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016

CG
Posts:202
Joined:Wed Aug 06, 2008 3:33 pm

Re: Sole Trader VAT on Fuel

Postby CG » Tue Jun 04, 2019 6:25 pm

Thanks for your reply.

As we use actual costs for motor expenses, don't we need to use actual fuel costs and apply a business percentage? Or are you saying we can also use approved rates from HMRC?

I also understand you can claim all the VAT back on repairs and maintenance if there is some business use of the vehicle and the business pays for the work – so if it is paid for out of one of the accounts/cards that are used for the business can we claim 100% of the VAT on repairs and maintenance?

For the purposes of the year end accounts do I still apportion repairs and maintenance and only claim business use?

Many thanks

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Sole Trader VAT on Fuel

Postby robbob » Wed Jun 05, 2019 7:46 am

Or are you saying we can also use approved rates from HMRC?
yes for vat on fuel you can use the approved rates if you want - you must know the total of business miles done in the period though.
I also understand you can claim all the VAT back on repairs and maintenance if there is some business use of the vehicle and the business pays for the work – so if it is paid for out of one of the accounts/cards that are used for the business can we claim 100% of the VAT on repairs and maintenance?
Presuming the vehicle is a car yes - basically as a sole trader you are the business so as long as you pay for the car repairs (and they are invoiced to you) you are fine - i would recommend paying from the business account if you can though to keep hmrc away from your personal statements - them being nosy and all that.

CG
Posts:202
Joined:Wed Aug 06, 2008 3:33 pm

Re: Sole Trader VAT on Fuel

Postby CG » Wed Jun 05, 2019 10:49 am

Thanks for that - that's really clear.

Can I just check that for income tax I only take the business portion of the net cost of repairs and maintenance?

CG
Posts:202
Joined:Wed Aug 06, 2008 3:33 pm

Re: Sole Trader VAT on Fuel

Postby CG » Mon Jun 10, 2019 11:58 am

Hi - sorry to ask again, but I just want to make sure I put the correct figures in the Profit and Loss account.

For fuel costs in the P & L - Do I just deduct the VAT reclaimed from the fuel receipts (whichever method I use) and then apply a business percentage to the balance?

For repairs and maintenance cost in the P & L - Do I deduct 100% of the VAT and apply the business percentage to the balance?

Many thanks :-)


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