VAT on Fuel

For businesses that are VAT-registered, fuel VAT can be reclaimed, but only under specific conditions. HMRC distinguishes between fuel used solely for business purposes (fully reclaimable) and fuel for mixed personal/business use. Most employees in company cars cannot reclaim fuel VAT unless their employer charges them for private mileage using the fuel scale charge system.

The standard VAT rate on fuel is 20%. There is no reduced rate for road fuel in the UK (unlike some other countries). Heating oil uses a 5% VAT rate in the UK — but road fuel does not qualify for this relief.

For consumers, the practical takeaway is that when petrol prices fall or rise, a portion of that movement is magnified by VAT. If wholesale oil prices rise by 10p/litre, the pump price rises by 12p because VAT (20%) is added on top. Conversely, if fuel duty were cut by 5p, the real consumer saving would be 6p per litre once VAT is included.

When WorthThePump calculates your saving, the pence-per-litre prices already include both duty and VAT — so the net saving figure is what you genuinely keep in your pocket.