A fuel card lets you purchase fuel exclusively at designated petrol stations. It works much like a credit or debit card, but businesses use it specifically for managing fuel expenses. The business pays for all transactions directly, so drivers do not need to pay upfront or wait for reimbursement.
This setup helps drivers avoid out-of-pocket costs and reduces the need for submitting receipts or expense claims.
The system records all fuel purchases and groups them into a single VAT invoice meeting HMRC requirements. These invoices therefore simplify the VAT reclaim process and make bookkeeping much easier. Some fuel card providers even offer discounts, sometimes saving you several pence per litre at specific fuel stations.
The result? Less hassle and more control over your fuel spending.
Who Can Use a Fuel Card?
You do not need to operate a large fleet to benefit from a fuel card. These cards are available to businesses of all sizes, including self-employed individuals.
Whether you are a delivery driver, contractor, consultant or run a small company car fleet, a fuel card could make your life easier. Any business that relies on vehicles for day-to-day operations can benefit from the control and simplicity a fuel card brings.
Even if you only manage a couple of vehicles, a fuel card could save you time and money. Larger businesses, especially those in logistics or transport, often find fuel cards essential due to the volume of fuel they use.
How Does a Fuel Card Work?
Using a fuel card is simple.
Drivers fill up at a participating petrol station and then pay with their card. They usually need to provide the vehicle’s registration number and mileage during the transaction, then enter their unique PIN for security. The provider records the transaction details and sends them directly to the business.
The business then receives an itemised invoice showing all transactions made using the fuel card. This allows the business to track fuel costs by driver, vehicle and location. Many providers also offer mobile apps or online dashboards where you can view live data, download invoices and even set restrictions for each card to control spending.
Benefits of Fuel Cards for Business
- Cost Savings – Many providers offer discounts of up to around 8p to 10p per litre depending on network and pricing model
- Time Savings – Reduce time spent collecting receipts and processing expense claims
- Spending Control – Set limits on fuel spend and restrict purchases to fuel only
- Better Tracking – Detailed reports help monitor fuel consumption, driver habits, and vehicle efficiency.
- Easy VAT Reclaim – Receive a single VAT invoice that meets HMRC requirements which makes VAT returns easier and more accurate.
- Security – PIN protection and transaction tracking reduce the risk of misuse or fraud.
- Predictable Budgeting – Some cards offer fixed weekly prices, helping you manage fuel costs in advance, especially helpful for high-mileage vehicles.
Are Fuel Cards Good for the Self-Employed?
Absolutely.
If you are self-employed and do a lot of driving for work, fuel cards can save you from dealing with piles of receipts. They provide a simple, consistent way to manage your fuel expenses and your monthly invoice can double as your expense report.
With less time spent on admin, you can focus more on running your business. Because the system documents all transactions, you can complete tax returns and VAT reclaims more accurately and efficiently.
What About Tax and Personal Use?
Anyone with a fuel card should be using it strictly for business purposes.
If an employee uses a fuel card to pay for private journeys, HMRC may classify this as a “Benefit In Kind“. This means the employee would need to pay additional Income Tax, and the employer would have to pay extra National Insurance Contributions.
To prevent this, businesses should:
- Ensure employees only use fuel cards for work-related travel
- Ask employees to repay any costs associated with personal fuel use
Keeping fuel use separate and well-documented will avoid any confusion when it comes to tax reporting. If an employer provides fuel for a company car and does not receive full repayment from the employee, the Car Fuel Benefit Charge will apply.
Can You Reclaim VAT with a Fuel Card?
Yes.
You can reclaim VAT on business fuel purchases made with a fuel card, if the invoice is a valid VAT invoice meeting HMRC requirements. This is one of the reasons why many businesses choose to use them. However, you cannot reclaim VAT on fuel used for personal travel unless the employee reimburses the cost in full, or you apply the VAT Fuel Scale Charge to account for private use.
Many fuel card providers allow you to track mileage at the point of purchase, which helps ensure you have the necessary data to back up your VAT claims.
How to Choose the Right Fuel Card
There are many types of fuel cards on the market, so you should compare your options. Some cards work only at one fuel station brand, while others give you access to a wide network. Some providers offer fixed weekly prices, while others provide discounts based on location or fuel type.
Here are some things to consider:
- Where do your vehicles usually fill up?
- Do you want predictable pricing or discounts at specific stations?
- Will your drivers need to fill up across the UK or just locally?
- Would you benefit from online tools or mobile apps?
- Do you need features like spending limits or fuel-type restrictions?
Well-known providers include BP, Shell, fuelGenie, Esso and UK Fuels. Check each provider’s coverage and features to find the best fit for your business.
Getting Started with a Fuel Card
Applying for a fuel card is straightforward. Most providers have a simple online form where you share details about your business, how many vehicles you operate and your estimated fuel usage. Once approved, the provider sends out your cards and you can start using them right away.
It might be helpful to start with a few cards to test how well they work for your business needs. Many providers offer flexible packages, so you can adjust the number of cards and features as your company grows.
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This article is for general informational purposes only and does not constitute legal or financial advice. While we aim to keep our content up to date and accurate, UK tax laws and regulations are subject to change. Please speak to an accountant or tax professional for advice tailored to your individual circumstances. Pi Accountancy accepts no responsibility for any issues arising from reliance on the information provided.