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How Do I Record Fuel Scale Charges?

HMRC say that if you have a company vehicle but also do some private mileage in it, then you should:-

  1. Either NOT claim any VAT on fuel put in this vehicle.
  2. Or write down the exact private mileage and only claim the VAT on fuel used for business use.
  3. Or pay a standard scale charge every time you do a VAT return that relates to the emissions of your car.

So before you do any scale charges you should check whether the value of your scale charge is greater than the value of VAT on the actual fuel you purchase.

If this is the correct course for you then you need to enter a journal either quarterly or monthly according to your returns, by doing the following:-

  1. Create a new nominal in Misc Revenue called Fuel Scale charges
  2. Go to Recurring Entries in Entries and set up a new Journal.
  3. Set the Frequency – the next Date, Method No Cashflow, Inv Date the same and Next Date.
  4. First line goes to new  income nominal and is standard rated VAT
  5. Second line is also to this nominal but O VAT and just the net value
  6. Third line is your fuel cost nominal and O VAT

    A simpler way to enter this which isn't strictly correct for HMRC is to enter two lines.