I have a lease car from my employer/tax on petrol?

Question

I only get 11 pence per business mile back on my mileage for work. My employer now wants the receipts with VAT number on so they can claim the tax back on the petrol i buy, why can't I claim the vat back after all I'm initially paying for it?

Answer 1

You can only claim back input VAT (ie: on expenses such as petrol) against output VAT (ie: on items sold/services rendered). To do this your business also needs to be registered for VAT

Hence it is absolutely impossible for you to claim back VAT.

If it wasn't a company car you may however be able to claim back some income tax. You can deduct petrol expenses etc at 40p per mile, which is 29p more than you get. Thus if you did a 100 miles you could deduct £29 from your earnings before tax thus saving £5.80 tax (at 20%). For company cars HMRC publishes advisory fuel rates but these will never result in a tax refund - only instead potential extra tax if you get more than the maximum.