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
-
Should you use simplified expenses?
The flat rate expense you can claim for business journeys if you’re self-employed has increased to 55p per mile. Can you use simplified expenses for motoring costs and is it more tax efficient to do so?
-
HMRC targets smaller tax debts
HMRC is stepping up collection of lower‑value tax debts, signalling a firmer approach to long‑overdue liabilities while encouraging earlier engagement. Direct recovery from bank and building society accounts has been re‑introduced on a trial basis, alongside a government consultation on HMRC powers and tax administration. What are the key points to be aware of?
-
New digital process for NI refunds
HMRC has introduced an online service to claim a refund of Class 1 NI contributions but not everyone can use it. What can you do if you've paid too much NI?