Value Added Tax

Motoring expenses

Produced by Tolley
  • 27 Jan 2022 10:21

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

  • Motoring expenses
  • Repairs and maintenance costs
  • Car parking
  • Road fuel
  • Applying the VAT fuel scale charge
  • Charge for the private use
  • Paying mileage allowances
  • Fuel VAT receipts
  • Insurance claims
  • Charging electric vehicles
  • More...

Motoring expenses

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:

  1. Buying and selling a car

  2. 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:

  1. the car is used for business purposes

  2. the business pays for the work to be done

  3. if the car is driven by a sole proprietor or partner, then the car cannot be used solely for private purposes

VIT54500; Notice 700/64

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.

See the Leasing a car guidance note for more information regarding when maintenance charges may be subject to the 50% VAT block for leased cars.

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.

Please note that penalties and fines levied for failure to abide by the parking regulations are outside the scope of VAT. See the Supply and consideration ― unfulfilled supplies, compensation and fines guidance note for more information.

Road fuel

If the business pays for road fuel,

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