contactnew

When you can claim back VAT on purchase of a car

Source: HM Revenue & Customs | | 14/08/2019

There are complex VAT rules that determine the amount of VAT that can be recovered when purchasing a new car. The usual rule is that when you purchase a car for your business then no VAT can be reclaimed.

The main exception to this rule is when 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 and you must be able to demonstrate that this is so. Accordingly, a 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 a specific business related activity such as: use as a taxi, self-drive hire car or a car for driving instruction.

If your business leases a car for business purposes, you can normally reclaim 50% of the VAT paid on the lease rentals. If the leased car is used exclusively for business purposes, 100% of the VAT can be reclaimed.

The rules are less complicated when you purchase a commercial vehicle such as a van, lorry or tractor that is only used for business purposes. In these cases, all the VAT charged on purchase can be reclaimed. The VAT incurred on the purchase of motorcycles, motor-homes and motor caravans, vans with rear seats (combi-vans) and car-derived vans can also be recovered if they are used solely for business purposes.



 

Latest News

Employer toolkit for EU Settlement Scheme published
20/02/2020 - More...
Following Brexit, the government has published an updated toolkit for employers on how to support their employees who

Change to the off-payroll working rules
20/02/2020 - More...
As part of a review into changes to the operation of the off-payroll working rules (IR35), HMRC has announced that the

Could you claim the marriage allowance?
19/02/2020 - More...
If you are entitled to the marriage allowance and have not yet applied, you could receive a payment of up to

Search News


Newsletter

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

» Sign up for the Newsletter
» Login

» Cookie Policy

» Privacy Policy

Social Media

twit-new