New fuel scale charge flat rates apply from next week
The fuel scale charge is one option for accounting for VAT where an employer pays for fuel costs and there is a mix of business and private use. The figures you have to use will change from 1 May. What do you need to know?
Using the fuel scale charge means you can reclaim VAT on all fuel costs, including that for private travel. However, you must then account for VAT on a notional sale of fuel set by HMRC (the scale charge) which varies according to the CO2 emissions of each car. The higher the CO2 figure, the greater the charge. If there’s more than one vehicle, a scale charge applies for each. The scale charge reduces your paperwork for each quarter, as there's no need to keep detailed mileage records. As an added perk, there will be fewer records for an officer to pick through in the event of a business records check.
On the downside, the scale charge can be inefficient if the private mileage is relatively low. In these circumstances you may be better off if you require employees to keep detailed records, or have them reimburse the private proportion. If you do want to use the scale charge, ensure you change the flat rate with effect from 1 May as these have now been published.
Related Topics
-
Getting out of the child benefit tax trap
You expect to earn over £60,000 for this tax year which means you may have to pay back some or all of your family’s child benefit due to the high income child benefit charge (HICBC). Is it possible to reduce the charge?
-
HMRC targets “dodgy shops” in new compliance crackdown
The government has announced a new crackdown on businesses suspected of facilitating tax evasion, with HMRC increasing its focus on so-called "dodgy shops" used to enable tax fraud. What is HMRC targeting?
-
Mandatory payrolling of benefits in kind delayed
The government has revised plans to introduce the mandatory payrolling of benefits in kind from 6 April 2027, which will now be limited to company cars, vans, fuel and medical benefits. What's the full story?