14 Mar Can I claim back the VAT on my volunteer’s mileage?
Organisations that are VAT registered CAN claim back the VAT element of a mileage expenses payment made to a volunteer/employee.
Let’s assume your volunteer has claimed 100 miles. You firstly need to know what portion of each mile claimed (you can pay up to 45p per mile tax free) is considered to be for fuel.
This will depend on the size of their car engine and the type of fuel they use – you can look up the relevant figure HERE (ignore the statement on the page that says this is for employees with company cars only – you can use these rates for calculating VAT on own car mileage).
CALCULATE THE VAT
Let’s assume that your volunteer has a 1600cc petrol engine – the rate for this on the HMRC Advisory Fuel Rate table from 1 March 2015 is 13p per mile. This 13p is the fuel cost INCLUSIVE of VAT so we use the following calculation to find out what is the VAT element of our volunteer’s 100 mile claim, assuming we are paying the volunteer the maximum tax free rate of 45p per mile:
Total fuel cost = 100 miles x 13p = £13.00
VAT element = £13.00 x 20/120 = £2.17
Therefore, the organisation can claim £2.17 on the 100 mile mileage claim.
It is important that the claim form includes a question on the engine type and size so that this calculation can be carried out correctly.
NOT PAYING THE FULL RATE?
If you do not pay the volunteer the full 45p per mile mileage rate, you will need to pro rata your VAT claim accordingly. The HMRC advice on their website states:
Some employers cap employees to a particular level of allowance. For example, the employer may decide that employees with cars with engines over 2000cc will receive only the rate paid for vehicles between 1400 and 2000cc. If this happens HMRC will only allow input tax recovery on the mileage rate that the employer has paid to the employee.
YOU NEED VAT RECEIPTS
Please note that you will need the volunteer to provide you with petrol receipts to cover the fuel cost, i.e. in our example you will need petrol receipts for £13 or more. These receipts will be in addition to the standard paperwork required for a mileage claim.
if you are NOT claiming VAT back on mileage, you do not need petrol receipts from the volunteer.
Contact us if you need further clarification or visit our support centre for further free expert online advice and support.