You may notice that if an employee uses their own vehicle to work, they can claim back the mileage from their employer or get a tax deduction for the same amount of their employment income.
When you drive your own car for business and claim mileage costs (eg 45 Km), your business can claim VAT on the fuel portion of the mileage costs; as long as your business is VAT registered. Interesting right?
However, before we discuss claiming VAT on mileage, this article will first discuss what VAT is. Do you know the meaning of VAT or VAT?
What is Value Added Tax or VAT?
Value Added Tax (VAT) is a tax imposed on any added value of goods or services in circulation from producers to consumers. In English, VAT is called Value Added Tax (VAT) or Goods and Services Tax (GST).
VAT is an indirect tax, meaning that the tax is paid by another party (trader) who is not a tax bearer or in other words, the tax bearer (the final consumer) does not directly deposit the tax he bears.
However, do you know how to find out how to claim Value Added Tax on Mileage? In this article, we will give you the easiest tips for claiming VAT on mileage. Let’s readWhat’s Quick Tips The Easiest Way To Claim VAT On Mileage?
There are some quick easy tips for claiming VAT on your company, what are they? Check out the explanation below.
Find Out If Your Business Is Eligible To Claim VAT Based On Mileage
Even though the number of recipients is going down, perhaps due to rising fuel costs, it’s still a good way for your business to reduce mileage costs, especially if you have a big opportunity or if your drivers clock a lot of mileage.
Determine Fuel Part Mileage Claim
To calculate the amount your business can claim back with VAT, you must first calculate the fuel portion of the mileage claim and follow mileage deduction rules.
Calculate How Much VAT You Can Claim On Mileage
After calculating the fuel ingredients, you can determine the amount of VAT your business can claim on business mileage. The current VAT rate on fuel is 20%. Businesses can therefore claim from the fuel section a mileage claim. The fuel portion is divided by 6 because it includes 20% VAT.
Who Can Claim VAT on Employee Claims?
All VAT registered businesses can claim VAT on business mileage by providing the business with hiring a driver.
Freelancers and contract staff cannot claim mileage with your business because they are employed by different entities. Your own business cannot claim VAT input tax on behalf of another business.
Can We Claim VAT for the Passengers We Carry?
Employers can choose to pay a tax-free passenger allowance of 5 percent on top of their mileage allowance if they take passengers on work-related trips.
However, paying passenger benefits to employees does not affect the amount your business can claim for VAT based on mileage.
Also note that the employer will only provide this payment if the passenger is another employee traveling for business purposes.
What can’t employees claim?
You will not be able to claim personal travel made during business hours and this is considered outside of work responsibilities. You also cannot claim your regular commute to work. This means that in order for your claim to be successful and regulated, you must record the mileage used as accurately as possible.
How much amount can you claim?
If you are an employee and you use your own car for work purposes – perhaps for a client meeting – or if you are a merchant and need to meet with customers, then you can claim. The amount you will return will determine the number of miles you do.