Did you know that business travel in the UK hit a record £68 billion in 2024? Running a business means keeping a close eye on every opportunity to increase sales and manage company spend wisely. One area where you could see substantial savings is by claiming VAT on mileage.  

Many business owners are unaware that VAT can be reclaimed on business-related travel, but with the right guidance, you can make the most of this opportunity. 

Let’s look at who can claim VAT on mileage expenses and how to make a claim.   

Who can claim VAT on mileage?

Think of claiming VAT on mileage like getting a refund on part of your fuel costs—but only if you follow the rules. 

Here they are:

Your company must be VAT–registered 

Being VAT-registered means you charge VAT on your sales and can reclaim VAT on your business expenses. 

If your business isn’t VAT-registered, you can’t reclaim VAT on anything, including mileage.  

It must be for business use only 

Your trip has to be 100% work-related.

If you’re: 

• Driving to meet a client? That counts.  
• Going to a networking event? Absolutely.   
• Taking a detour to grab a coffee with a friend on your way home? Nope, that part doesn’t count! 

Let’s break it down with a real-world scenario

Imagine you run a small IT consulting business, and you’re VAT-registered.  

You often drive to meet up with clients, attend tech conferences, and visit suppliers for new equipment. Since all these trips are for business purposes, you can claim VAT on the mileage. 

Now, let’s say you also use the same car for personal trips—like going on holiday or picking up groceries. That mileage can’t be included in your VAT claim because it’s not business-related. 

What do you need to make a successful claim? 

First and foremost, you need to keep accurate records. So, every time you drive for work, you should keep track of:

• The date. 
• Where you started and where you went. 
• The reason for the trip. 
• How many miles you covered. 

You also need fuel receipts that show VAT details—a credit card statement alone won’t cut it.  

Your step-by-step guide to claiming VAT on mileage

Let’s imagine Sarah runs a small consulting business and frequently travels to meet clients. She wants to claim VAT on her mileage expenses.  

Here’s how she does it: 

Step 1. Gather fuel receipts 

Sarah makes sure to keep all her fuel receipts whenever she fills up her car. Since VAT can only be reclaimed on fuel for business use, having VAT invoices from petrol stations is essential. 

She stores them in a folder and uploads digital copies to her expense management platform to stay organised. 

Step 2. Track business mileage 

Sarah keeps a detailed mileage log. For every business trip, she records: 

• The date of the journey. 
• The journey details (i.e., from her office in Manchester to a client’s premises in Liverpool). 
• The purpose of the journey (i.e., client meeting). 
• The distance travelled (80 miles round trip). 

She uses Capture Expense’s AI-powered matching tool to accurately categorise her expenses, making sure she only claims VAT on business mileage.  

By maintaining an accurate mileage log, she can provide evidence for all her business-related journeys if HMRC ever needs verification. 

Step 3. Apply the correct advisory fuel rate 

Sarah drives a petrol car with a 1.6-litre engine. Checking HMRC’s advisory fuel rates for 2025, she finds that the applicable rate is 15p per mile. 

Step 4. Calculate the fuel cost for business use

She multiplies her business miles (see Step 2) by the advisory fuel rate: 

80 miles × £0.15 = £12.00 (fuel cost for this trip). 

If Sarah completes multiple business trips in a month, she repeats this calculation for each journey and then adds the totals together.  

Step 5. Work out how much VAT to reclaim 

VAT is included within the fuel cost, so to extract the reclaimable amount, Sarah divides by 6 (since VAT at 20% means 1/6 of the total price is VAT): 

£12.00 ÷ 6 = £2.00 reclaimable VAT for this trip.

If Sarah drives 1,500 business miles in a month, her VAT calculation would be:

1,500 miles × £0.15 = £225 (total fuel cost).

£225 ÷ 6 = £37.50 reclaimable VAT. 

At the end of the quarter, Sarah includes her VAT mileage claim in her VAT return.  

Are you looking for an accurate business mileage tracker? 

If you need help claiming VAT on mileage or with any other aspect of your travel expenses, book a demo today to see how we can help.