Tag: VAT

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VAT on mileage

Don’t forget to claim the VAT on business mileage. 

You can’t claim VAT on the full 45p but you can claim on the fuel element. You can find out the current fuel element Advisory fuel rates – GOV.UK (www.gov.uk) 

For instance, if my car has a fuel rate of 14p. This means that, for every mile, I can claim 14p *20/120 = 2.33p in VAT. There is no VAT on the remaining 31p as that is deemed to be for insurance, maintenance, wear and tear etc. 

fuel around the date of the journey ie when you you fill up before or after the trip. 

*If you’re interested then it’s because the 45p is an allowance and EU/UK law states that you can’t claim VAT on allowances. The EU did one of their usual accommodating moves and agreed that, as long as there was a valid VAT invoice for fuel around the same date (eg filling up before or after the mileage) then the company could claim VAT on the fuel element of the 45p. 

All you need to do is to keep a VAT invoice* (not a credit card receipt please!) for filling up just before or after your trip 

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Tax tip

Business entertaining is not allowed for VAT or Corporation/Income tax purposes.

The only exception is staff entertaining. I’ve written on this separately if you want the detail but it must be below £150 per person per year.

Customer and supplier entertaining are never allowable and this is one of the many adjustments that we make when we prepare your accounts and tax returns.

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Tax Tip – VAT Registration limit

If your turnover exceeds, or is expected to exceed, £85,000 in any twelve month period you will need to register for VAT from the following month.

Please note that this is a rolling 12 month period, NOT your financial year. It is a common mistake so, each month, you need to keep an eye on your sales in the previous 12 months.

We’ve had a few clients go over the VAT limit in the middle of their financial year and only find out when we do their year end accounts some time later. This means that they may end up having to pay the VAT themselves so it is worth keeping an eye on your invoicing.