Category: VAT

The fuel scale charge is a practical VAT mechanism for businesses that provide fuel for both business and private journeys. Rather than tracking every private mile, it offers a simplified way to account for the VAT on private fuel use.

What Is the Fuel Scale Charge?

When a business reclaims VAT on all the fuel it buys, including fuel used privately, the fuel scale charge adds back an amount of output VAT to reflect that private use. The figure is based on the vehicle’s CO2 emissions, removing the need for detailed mileage records.

When to Use It

The fuel scale charge is most useful where separating business and private fuel would be impractical. It lets a business recover all its input VAT on fuel and then account for private use through a single, standardised charge.

The Alternative

Businesses can instead only reclaim VAT on business mileage, supported by detailed records, or not reclaim fuel VAT at all. The right choice depends on how much private use there is and how much administration you want.

How TaxDigit Can Help

Our Guildford-based team helps businesses decide whether the fuel scale charge is the most efficient option. Get in touch for practical VAT advice.

Fuel Scale Charge: UK-Wide VAT Support

The fuel scale charge is relevant to businesses with vehicles right across the United Kingdom, not just near our Guildford head office. TaxDigit helps businesses UK-wide decide whether the fuel scale charge or detailed mileage records give the best VAT outcome.

Our chartered certified accountants apply the correct CO2-based scale charge and keep your VAT on fuel both compliant and efficient. We support clients UK-wide, both remotely and from our Guildford office.

The fuel scale charge is often the simplest route, but it is not always the cheapest. For vehicles with low private use, keeping accurate mileage records and only reclaiming business fuel can save money, while for higher private use the scale charge avoids a lot of admin. We compare both approaches against your actual usage so you are not paying more VAT than you need to.

How we help with the fuel scale charge

• Deciding whether the fuel scale charge or mileage records suit your business
• Applying the correct CO2 emissions band to each vehicle
• Accounting for the scale charge on your VAT return
• Reviewing company car and fuel policies for VAT efficiency
• Keeping records that support your chosen method

HMRC provides a tool to work out the charge here: HMRC VAT fuel scale charge tool.

Frequently Asked Questions

What is the fuel scale charge?
It is a simplified VAT method for businesses that provide fuel for both business and private journeys, based on a vehicle’s CO2 emissions, so you do not have to track every private mile.

Do I have to use the fuel scale charge?
No. You can instead keep detailed mileage records and only reclaim VAT on business fuel, which can be better for vehicles with low private use.

Can TaxDigit help if I am not based in Guildford?
Yes. We advise on the fuel scale charge for clients UK-wide, remotely and from our Guildford office.

The Capital Goods Scheme is a VAT mechanism that affects businesses buying high-value assets such as property or expensive equipment. It adjusts the amount of VAT you can recover over several years to reflect how the asset is actually used.

What the Scheme Covers

The Capital Goods Scheme applies to certain capital items above set value thresholds, most commonly land and buildings, and some computer and aircraft expenditure. These assets are watched over an adjustment period rather than having their VAT settled in one go.

How Adjustments Work

Under the scheme, the initial VAT recovery is reviewed each year across the adjustment period. If the proportion of taxable use changes, you may have to repay some VAT or be entitled to recover more, keeping recovery in line with actual use.

Why It Matters

The Capital Goods Scheme is especially relevant to partly exempt businesses and property owners, where use can shift over time. Overlooking it can lead to incorrect VAT recovery and later corrections.

How TaxDigit Can Help

Our Guildford-based team helps businesses apply the Capital Goods Scheme correctly. Contact us to get your VAT recovery on major assets right.

Capital Goods Scheme: UK-Wide VAT Support

The Capital Goods Scheme affects businesses buying high-value assets right across the United Kingdom, not just near our Guildford head office. TaxDigit helps businesses UK-wide adjust VAT recovery on property and expensive equipment correctly over the adjustment period.

Our chartered certified accountants track each capital item, calculate the annual adjustments and keep your VAT recovery accurate for the full scheme period. We support clients UK-wide, both remotely and from our Guildford office.

The Capital Goods Scheme is easy to overlook because the adjustments fall in later years, long after the asset is bought. A change in how a building is used, a move between taxable and exempt activities, or a sale partway through the period can all trigger a clawback or an extra recovery. We diarise each item so these adjustments are made on time rather than missed and queried later by HMRC.

How we help with the Capital Goods Scheme

• Identifying assets that fall within the Capital Goods Scheme
• Setting the correct five or ten year adjustment period
• Calculating annual VAT adjustments as usage changes
• Handling adjustments on the sale of a capital item
• Keeping records to support every adjustment

HMRC explains the scheme here: HMRC guidance on the VAT Capital Goods Scheme.

Frequently Asked Questions

What is the Capital Goods Scheme?
It is a VAT mechanism that spreads and adjusts the VAT recovery on certain high-value assets, such as property and expensive computer equipment, over a five or ten year period.

Which assets are covered?
Typically land and buildings over a set value and certain high-value equipment, with the adjustment period depending on the type of asset.

Can TaxDigit help if I am not based in Guildford?
Yes. We advise on the Capital Goods Scheme for clients UK-wide, remotely and from our Guildford office.

VAT becomes considerably more complex for partially exempt businesses. When a business makes both taxable and exempt supplies, it cannot recover all of its input VAT, and special rules determine how much can be reclaimed.

What Is Partial Exemption?

Partially exempt businesses make a mix of taxable supplies, which allow VAT recovery, and exempt supplies, which do not. Common examples include some financial, property and insurance activities. The challenge is splitting input VAT fairly between the two.

The Standard Method

Most partially exempt businesses use the standard method, recovering VAT directly attributable to taxable supplies in full, blocking VAT on exempt supplies, and apportioning the remainder based on turnover. A de minimis limit can allow full recovery where exempt input VAT is small.

Special Methods

Where the standard method gives an unfair result, HMRC may agree a special method that better reflects how costs are used. Annual adjustments then true up the year’s recovery.

How TaxDigit Can Help

Our Guildford-based team helps partially exempt businesses calculate and maximise VAT recovery correctly. Get in touch for specialist VAT support.

Partially Exempt Businesses: UK-Wide VAT Support

Partially exempt businesses face some of the trickiest VAT rules, and they operate right across the United Kingdom, not just near our Guildford head office. TaxDigit helps partially exempt businesses UK-wide recover the right amount of input VAT and stay on the correct side of the rules.

Our chartered certified accountants build a robust partial exemption method, run the annual adjustment and check the de minimis limits so your VAT recovery is both accurate and defensible. We support clients UK-wide, both remotely and from our Guildford office.

The hardest part for partially exempt businesses is often the apportionment of overhead VAT that relates to both taxable and exempt activities. The standard method does not always give a fair result, and a special method agreed with HMRC can sometimes recover significantly more. We review which approach suits your business and keep the calculation consistent year on year.

How we help partially exempt businesses

• Calculating recoverable input VAT under the standard method
• Applying the de minimis limits to recover VAT in full where possible
• Designing and agreeing a special method with HMRC where beneficial
• Running the annual adjustment accurately
• Documenting the method so it withstands an HMRC review

HMRC explains exemption and partial exemption here: HMRC guidance on VAT exemption and partial exemption.

Frequently Asked Questions

What is a partially exempt business?
A partially exempt business makes both taxable and exempt supplies, which means it cannot recover all of its input VAT and must apportion it under partial exemption rules.

What are the de minimis limits?
If exempt input VAT falls below certain limits, a partially exempt business may be able to recover all of its input VAT for that period.

Can TaxDigit help if I am not based in Guildford?
Yes. We advise partially exempt businesses UK-wide, remotely and from our Guildford office.