Can You Claim VAT on Fuel? UK Rules Explained

2026/27 context: the standard UK VAT rate is 20%, with 5% and 0% rates for specific supplies, and the VAT registration threshold is £90,000 of taxable turnover.

Fuel is one of the biggest running costs for most businesses, and the 20% VAT built into every litre at the pump adds up fast. So it is no surprise that "can you claim VAT on fuel" is one of the most searched VAT questions in the UK — and one of the most misunderstood.

The short answer is yes: if your business is VAT-registered, you can reclaim the VAT on fuel used for business purposes. But — and this is the part that catches people out — you can only reclaim the VAT on the business-use share of the fuel. Any VAT on fuel used privately must be paid back to HMRC.

The golden rule: business use only

That sounds simple. In practice, HMRC gives you four different routes for dealing with road fuel VAT, each with its own record-keeping rules, and choosing the wrong one can cost you money — or trigger a penalty. This guide explains all four routes, the 2026/27 fuel scale charges, Advisory Fuel Rates, and worked examples so you can choose the route that suits your business.

Before diving into the routes, lock in the principle that underpins all of them: as a VAT-registered business you may reclaim VAT only on fuel used for business purposes. That covers client meetings, site visits, deliveries, collecting supplies and travel between business premises. Commuting from home to your normal workplace does not count (with narrow exceptions), and neither does personal running around. If the business pays for fuel that covers both, HMRC needs to see the private share accounted back — and that is exactly what the four routes below achieve, each in a different way.

The four HMRC routes for claiming VAT on fuel

HMRC offers four approved ways to handle VAT on road fuel. Pick one per vehicle (you can use different routes for different vehicles), and stick with it.

Route 1: Reclaim all the VAT and pay the fuel scale charge

This is the simplest route for paperwork. You reclaim all the VAT on all fuel for the vehicle — business and private — and then pay HMRC back for the private element by applying the fuel scale charge.

The fuel scale charge is a fixed, VAT-inclusive annual figure set by CO2 band. For the scale-charge year running 1 May 2026 to 30 April 2027, the charges are:

Apply these from your first VAT period starting on or after 1 May 2026.

A few important details:

• If the car's exact CO2 figure falls between two bands, round down to the nearest multiple of 5. A car at 143 g/km sits in the 140 band (£1,182).
• Cars too old to have a CO2 figure (registered before March 2001) are banded by engine size: 1,400cc or less → band 140; 1,401–2,000cc → band 175; over 2,000cc → band 225 or more.
• Electric cars are excluded from the scale charge entirely. The charge only applies to petrol and diesel cars where the business pays for all fuel including private use.

How the VAT maths works

The scale charge figure is VAT-inclusive, so the VAT element within it is the charge divided by 6 (the 1/6 VAT fraction at the 20% rate). For a band-140 car:

• Scale charge: £1,182
• VAT due back to HMRC: £1,182 ÷ 6 = £197

On your VAT return, the scale-charge VAT goes into Box 1 (VAT due on sales and other outputs), and the net amount into Box 6 (total value of sales excluding VAT).

Worked example: scale charge vs mileage records

This comparison shows how to decide between routes honestly. Take a company car rated at 140 g/km CO2.

• Business spends £3,600 per year (VAT-inclusive) on fuel for the car.
• Total VAT on those fuel receipts: £3,600 ÷ 6 = £600.
• Scale-charge VAT due: £1,182 ÷ 6 = £197.
• Net VAT reclaimed under Route 1: £600 − £197 = £403.

Now compare with Route 2 (mileage records). Suppose the car does 15,000 miles a year, of which 12,000 are business miles — 80% business use:

• Reclaimable VAT: £600 × 80% = £480.

In this case the mileage-records route wins (£480 vs £403), because private mileage is low. But flip the numbers — say only 5,000 of the 15,000 miles are business use (33%) — and the records route yields just £600 × 33% = £198, while the scale charge still nets £403. With high private mileage, Route 1 wins.

There is no universally "best" route. Do the maths on your actual mileage before you choose.

Route 2: Keep detailed mileage records

Under this route you reclaim VAT only on the business share of fuel. That means you must keep accurate records showing total mileage and business mileage for each vehicle. You can:

• Keep a full mileage log of every journey, or
• Keep detailed records for a representative sample period (for example, one quarter) and apply the resulting business-use percentage going forward, reviewing it periodically.

The records must be good enough to stand up if HMRC asks. A notebook estimate of "about 60% business" is not a record.

Route 3: Claim no VAT on fuel at all

You are allowed to simply not reclaim any VAT on fuel. For a sole trader doing very few business miles, this is perfectly legitimate — just remember you cannot then claim anything at all on fuel VAT.

Route 4: The business pays for business journeys only

Here the business pays only for fuel used on business journeys — for example, via a fuel card restricted to business use — and all private fuel is paid for personally. Because no private fuel goes through the business, no scale charge or apportionment is needed. The catch is discipline: private and business fuel must genuinely be kept separate, with evidence to prove it.

Advisory Fuel Rates: the easy way to work out VAT on mileage

If you reimburse employees for business travel in company cars, or if the business needs to value business mileage, HMRC publishes Advisory Fuel Rates (AFRs) — per-mile figures by fuel type and engine size. From 1 September 2026, the rates are:

Petrol: ≤1,400cc — 14p; 1,401–2,000cc — 17p; over 2,000cc — 27p Diesel: ≤1,600cc — 15p; 1,601–2,000cc — 16p; over 2,000cc — 22p LPG: 11p / 13p / 20p (same engine bands as petrol) Electric: home charging — 7p per mile; public charging — 15p per mile

Hybrid cars are treated as petrol or diesel cars (depending on the engine) for AFR purposes. AFRs are reviewed quarterly, so check the current rates each quarter rather than fixing them in your head.

Reclaiming VAT on reimbursed business mileage

VAT reclaimable = business miles × AFR × 1/6

Worked example: an employee does 6,000 business miles in a 1.8-litre petrol company car, reimbursed at 17p/mile:

• Payment: 6,000 × £0.17 = £1,020
• VAT reclaimable: £1,020 ÷ 6 = £170

One condition: you must hold VAT fuel receipts covering at least the amount of VAT you claim. The £170 must be backed by fuel receipts with at least £170 of VAT on them.

What about employees using their own cars?

The well-known 45p/25p approved mileage allowance is for income tax relief when employees use their own cars for business travel. It is not a VAT claim, and you cannot reclaim VAT on the full 45p.

For VAT, only the fuel element of own-car mileage is reclaimable — worked out using the Advisory Fuel Rates. Using the same example above (6,000 miles, 17p AFR), the VAT reclaimable is £170, subject to holding adequate VAT fuel receipts. Handle the income tax and VAT positions separately.

Cars vs vans: different treatment

The fuel scale charge applies to cars. For a van with private use, there is no scale charge — keep mileage records and apportion fuel VAT between business and private use. A van with a payload of one tonne or more sits outside HMRC's definition of a car in the first place.

Repairs and maintenance: a useful bonus

Worth knowing: VAT on repairs and maintenance to business vehicles is 100% reclaimable as long as the business pays for the work — even where the vehicle also has private use. Unlike fuel, there is no apportionment or scale charge for repair bills.

Records and receipts: the non-negotiables

Whichever route you choose, two things are mandatory:

1. Valid VAT receipts for all fuel. Without them, there is nothing to reclaim.
2. Records kept for 6 years. HMRC can go back further in cases of error or fraud, so keep everything organised and accessible.

If you use mileage records (Route 2 or vans), the log must show dates, destinations, business purpose and mileages — enough that an HMRC officer can reconstruct the business-use percentage.

Conclusion

Yes, you can claim VAT on fuel in the UK — but only on the business-use share, and HMRC insists the private share is properly accounted for. The four routes (scale charge, mileage records, claim nothing, business-only payment) give every business a workable option, and the 2026/27 scale charges and Advisory Fuel Rates give you the exact figures. Run the comparison with your own mileage, keep your receipts for 6 years, and revisit the route choice when your driving patterns change.

Frequently asked questions

Related reading

• VAT Cash Accounting Scheme Explained
• VAT Return Boxes
• How to File a VAT Return UK
• VAT on Invoices UK
• When to Register for VAT UK
• VAT Calculator

Educational information and estimates. These tools do not submit VAT returns or determine the treatment of a specific transaction.