VAT on Mileage Calculator

What this calculator does

When your business reimburses an employee for using their own car on a business trip, you typically pay them the HMRC Approved Mileage Allowance Payment (AMAP) rate – 45p per mile for the first 10,000 business miles in the tax year and 25p per mile after that. The good news for VAT-registered businesses is that part of every mileage payment represents fuel, and you can reclaim the VAT on that fuel element.

HMRC does not let you reclaim VAT on the full 45p. Instead, it treats only the Advisory Fuel Rate (AFR) for the vehicle as the fuel portion. Because that fuel figure already includes VAT at 20%, the reclaimable VAT is the VAT fraction of one sixth (1/6) of the fuel element. This tool calculates exactly that. It is built for small business owners, company directors, bookkeepers and accountants who reimburse staff or directors for business mileage and want to recover the maximum legitimate input VAT.

How it works

The calculation follows HMRC's published method:

1. Fuel element = business miles × Advisory Fuel Rate. Pick the AFR that matches the vehicle's fuel type and engine size (these are the rates effective 1 June 2026).
2. Reclaimable VAT = fuel element ÷ 6. Since the AFR is VAT-inclusive, the VAT element is found by multiplying by the VAT fraction 1/6 (equivalent to 20 ÷ 120).
3. You must hold enough valid VAT fuel receipts to cover the fuel element – HMRC can ask to see them.

The current AFRs (from 1 June 2026) include: petrol 1401–2000cc 17p, petrol up to 1400cc 14p, diesel 1601–2000cc 17p, and the Advisory Electricity Rate for fully electric cars of 7p per mile for home charging (15p for public charging). Always check the latest rates, because HMRC updates AFRs quarterly (1 March, 1 June, 1 September, 1 December).

Worked example

A sales rep drives 1,000 business miles in a petrol car with a 1,800cc engine (the 1401–2000cc band, AFR = 17p/mile).

• Fuel element = 1,000 × 17p = £170.00
• Reclaimable VAT = £170.00 ÷ 6 = £28.33
• VAT reclaimable per mile = 17p ÷ 6 = £0.0283

So although the business pays the employee £450 (1,000 miles × 45p AMAP), the recoverable input VAT is £28.33 – provided VAT fuel receipts of at least £170 are retained.

Frequently asked questions

Can I reclaim VAT on the full 45p AMAP rate?

No. You can only reclaim VAT on the fuel element, which HMRC defines using the Advisory Fuel Rate for that vehicle. The remainder of the 45p covers wear and tear, insurance and depreciation, which contain no recoverable VAT.

Why divide by 6?

The Advisory Fuel Rate is a VAT-inclusive price for fuel. With VAT at 20%, the VAT element of any VAT-inclusive amount is 20/120, which simplifies to 1/6. Dividing the fuel element by 6 gives the VAT you can reclaim.

Do I need fuel receipts to reclaim the VAT?

Yes. HMRC requires you to hold valid VAT fuel receipts (VAT invoices) that cover at least the fuel element of the mileage claimed. Without sufficient receipts, the VAT reclaim can be disallowed on inspection.

Can I reclaim VAT on electric car mileage?

The position is complex. HMRC's Advisory Electricity Rate for fully electric company cars is 7p per mile for home charging from 1 June 2026, but reclaiming VAT on home-charged electricity for an employee's own EV is restricted because domestic electricity is supplied to the individual, not the business. Public charging used for business can carry recoverable VAT where you hold a VAT receipt. Seek advice for EV-specific claims.

Source: HMRC Advisory Fuel Rates (GOV.UK) and Travel mileage and fuel rates and allowances (GOV.UK). Rates effective 1 June 2026; AMAP 45p/25p for 2026/27.

Related tools: VAT Calculator, Mileage Allowance Calculator, Corporation Tax Calculator, Dividend Tax Calculator, All UK Calculators.