0191 257 0355

71 Howard Street, North Shields
Tyne & Wear, NE30 1AF


When you can reclaim VAT on a car purchase?

Source: HM Revenue & Customs | | 27/03/2018

There are complex VAT rules that determine the amount of VAT that can be recovered when purchasing a new car. In most cases, when a business purchases a car they can’t reclaim the VAT incurred.

The exception to this rule is if the new car is used solely for business use. This rule has been the subject of much case law over the years but it has generally been established that to qualify for VAT recovery, the car must not be available for any private use. This means that the car should only be available to staff during working hours and should never be used for personal journeys.

It is also possible to claim back the VAT on a new car that is purchased for business activities such as a taxi, self-drive hire car or a car for driving instruction.

If a business leases a car for business purposes, they can normally reclaim 50% of the VAT added to the lease rentals. 100% of the VAT can be reclaimed if the car is used exclusively for a business purpose.

The rules are generally straight forward for the purchase of commercial vehicles such as a van, lorry or tractor that are used only for business.

Planning note

The VAT incurred on the purchase of motorcycles, motorhomes and motor caravans, vans with rear seats (combi vans) and car-derived vans can also be recovered, if they are used solely for business use. The VAT recovery position might well encourage the purchase of one make / model of van over another and we recommend that proper consideration is given before any purchase is made.

 

Latest News

  • Tenth anniversary of first Debt Relief Order

    16/04/2019 - More...

    Debt Relief Orders (DROs) were first introduced in April 2009. The DROs assist people who have small levels of assets and insufficient surplus income to deal with debts under

  • Estate Agents targeted

    16/04/2019 - More...

    HMRC has launched an unannounced crackdown on money laundering regulation non-compliance by estate agents. This clampdown resulted in over 50 visits by HMRC staff to estate agents

  • Job related expenses you can claim against your tax

    16/04/2019 - More...

    If you are an employee and use your own money to buy things that you need for your job, you may be able to claim tax relief for the associated costs. It is usually only possible to

Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter
» Login

Copyright © 2019 - Read Milburn