Simplify Your VAT with the Fuel Scale Charge


Simplify Your VAT with the Fuel Scale Charge

At Helpbox, we’re committed to making VAT accounting as straightforward as possible for your business. One area that often causes confusion is accounting for VAT on fuel used for private mileage in company cars. Thankfully, the Fuel Scale Charge offers a simplified solution. Here’s everything you need to know about it.

What is the Fuel Scale Charge?

The Fuel Scale Charge is a method used by UK businesses to account for VAT on fuel provided for private use in company cars. Instead of keeping detailed records of private mileage, businesses can use this fixed amount, which is based on the vehicle’s CO2 emissions.

How Does It Work?

When your business provides fuel for both business and private use in a company car, you need to account for VAT on the private use portion. The Fuel Scale Charge allows you to do this without the hassle of tracking every mile driven for private purposes. Here’s how you can calculate it:

Steps to Calculate the Fuel Scale Charge
  • Determine CO2 Emissions: First, find out the CO2 emissions (in g/km) of your company car. This information can usually be found in the car’s documentation or obtained from the manufacturer.
  • Refer to HMRC Tables: HMRC updates a table quarterly that lists Fuel Scale Charges for different bands of CO2 emissions. This charge reflects the average private mileage and fuel cost for vehicles in each emissions band.
  • Apply the Charge: Use the charge from the table that matches your car’s CO2 emissions to calculate the VAT due. The scale charge includes VAT, so you’ll need to back-calculate to find the VAT amount.
Example in Action

Let’s say your company car has CO2 emissions of 150 g/km. Here’s how you would use the Fuel Scale Charge:

  • Look up the 150 g/km band in the latest HMRC Fuel Scale Charge table.
  • Find the charge corresponding to this emissions band.
  • Use this figure to account for the VAT on the fuel provided for private use.

Why Use the Fuel Scale Charge?

The Fuel Scale Charge simplifies VAT accounting for private fuel use in several ways:

  • Convenience: Avoid the hassle of detailed mileage records for private journeys.
  • Consistency: Apply a consistent method for calculating VAT across all company vehicles.
  • Compliance: Ensure accurate and efficient VAT accounting, keeping your business compliant with HMRC regulations.

Keeping Up-to-Date

The Fuel Scale Charges are updated quarterly, so it’s important to use the latest rates to ensure your VAT calculations are accurate. You can find the current rates on the HMRC website or in the VAT Notice 700/64, which provides detailed guidance on the Fuel Scale Charge.

Important Considerations
  • Regular Updates: Make sure you use the updated rates each quarter.
  • Applicability: The Fuel Scale Charge is for businesses reclaiming VAT on both business and private fuel. If you only reclaim VAT on business fuel, you must maintain detailed mileage records.

The Fuel Scale Charge is an invaluable tool for simplifying VAT accounting on private fuel use in company cars. By using a standardised charge based on CO2 emissions, you can efficiently meet your VAT obligations without extensive record-keeping. For the latest rates and guidance, always refer to HMRC’s updates.

At Helpbox, we’re here to help you navigate the complexities of VAT. Contact us today for more information and assistance with setting up the Fuel Scale Charge for your business. Let’s make VAT accounting straightforward and stress-free!

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