EU Proposes Extending Northern Ireland Company-Car Fuel VAT Scheme to 2029

Summary 

• The proposal would allow the United Kingdom to continue applying the VAT flat-rate scheme for non-deductible fuel costs for company cars in Northern Ireland. 

• The proposed extension would run until 31 December 2029; the current authorisation expires on 31 December 2026. 

• The measure derogates from Articles 16 and 168 of the VAT Directive and still requires adoption through the EU process. 

Extended article 

The Council of the European Union has proposed extending the United Kingdom’s authorisation to apply a flat-rate method to non-deductible VAT on fuel expenses for company cars in Northern Ireland. The existing derogation is currently authorised until 31 December 2026. 

The proposed continuation would apply through 31 December 2029. It provides a simplified method in an area otherwise governed by the private-use and deduction rules in Articles 16 and 168 of the VAT Directive. As this is a proposal, businesses should distinguish the intended extension from adopted law and continue to monitor completion of the EU decision-making process. 

External sources: Read the proposal COM(2026) 514 | Read Implementing Decision (EU) 2023/2907

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