Input tax ― motoring expenses

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note looks at the rules for recovering VAT on motoring expenses. In particular, it looks at VAT recovery on fuel and the charging of electric vehicles. It also considers VAT recovery for other motoring-related expenditure.

The recovery of VAT on the purchase or lease of a car or other vehicle is covered separately in the Input tax ― buying and leasing cars and other vehicles guidance note.

For an overview of input tax more broadly, see the Input tax ― overview guidance note.

For in-depth commentary on the legislation and case law in this area, see De Voil Indirect Tax Service V3.436 and V3.433.

VAT recovery on road fuel

VAT is generally recoverable on fuel which is used for taxable business purposes. However, there are intrinsic difficulties in proving road fuel is really used for business purposes. As a result, there are four broad options for a businesses which pays for road fuel:

•
treat all of the VAT as input tax because 100% is used for business purposes (this will only be

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