VAT Reclaim on Business Mileage
Most UK drivers know about the AMAP rate. Far fewer know that VAT-registered businesses can reclaim a portion of the VAT included in the fuel component of business mileage. The reclaim is calculated against HMRC advisory fuel rates, not AMAP itself.
Who can reclaim VAT on mileage
Only VAT-registered businesses (or VAT-registered self-employed sole traders) can reclaim. If you are not VAT-registered, this section does not apply to your situation.
The driver claiming AMAP from the business must produce VAT receipts for the fuel purchases that are being reclaimed against. Without fuel receipts, no VAT reclaim is possible even for a VAT-registered business.
How the calculation works
Take HMRC's advisory fuel rate for your engine size and fuel type (these are reviewed quarterly and published on GOV.UK). Multiply by the business miles. The result is the deemed-fuel-only component of AMAP for your vehicle.
Calculate the VAT inside that deemed-fuel amount: divide by 6 for the standard 20 percent VAT rate (since 1 ÷ 6 ≈ 16.67 percent, the VAT portion of a VAT-inclusive fuel cost). That is your reclaim amount.
Worked example
10,000 business miles in the year, 1.6L petrol car. Q4 2026 advisory fuel rate for that engine class might be 13p per mile (check the current published AFR before computing). Deemed fuel cost: 10,000 × £0.13 = £1,300. VAT inside the £1,300 (at 20 percent VAT-inclusive): £1,300 ÷ 6 = £216.67 reclaimable.
The driver still claims the full AMAP for the mileage relief on their personal tax return. The VAT reclaim is the business's filing, separate from the driver's.
FAQ
Why is the VAT reclaim divided by 6, not multiplied by 20 percent?
Because the AFR is VAT-inclusive. To extract the VAT portion of a VAT-inclusive amount at 20 percent, divide by 6 (which gives the same answer as multiplying by 1/6, the VAT fraction of a 120 percent total). Multiplying by 20 percent would apply to a VAT-exclusive amount, which is not what AFR represents.
Do I need receipts for every fuel purchase?
HMRC expects sufficient receipts to cover the deemed-fuel amount being reclaimed against. You do not need to match every business mile to a specific receipt, but you do need receipts that demonstrate fuel was purchased to support the mileage.
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