Motoring expenses

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Motoring expenses
  • Repairs and maintenance costs
  • Car parking
  • Road fuel
  • Insurance claims

This guidance note provides an overview of when VAT can be recovered on motoring expenses. This note should be read in conjunction with the following guidance notes:

  • Buying and selling a car
  • Leasing a car

VIT50000

Repairs and maintenance costs

A business can reclaim VAT incurred on repair and maintenance costs providing the following conditions are satisfied:

VIT54500; Notice 700/64 ; De Voil Indirect Tax Service V7.449; V7.447(subscription sensitive)
  • the car is used for business purposes
  • the business pays for the work to be done
  • if the car is driven by a sole proprietor or partner then the car cannot be used solely for private purposes

Please note that a business can recover VAT on repair and maintenance costs even if it has elected not to recover VAT incurred on fuel purchases.

Car parking

Certain car parking will be liable to VAT at the standard rate. No VAT is charged on on-street meter parking. If the receipt issued by the car park operator has a VAT registration number shown then it is likely that the parking charges will be liable to VAT. The business can reclaim any VAT incurred on the parking costs incurred for business purposes.

Road fuel

If the business pays for road fuel, one of the following methods could be adopted to determine the amount of input tax recovered:

VATA 1994, ss 24, 26 and 57

The business can:

  • elect to reclaim all of the VAT incurred on the road fuel if the fuel is used solely for

More on Claiming input tax: