Goodier Smith and Watts

Devonshire House
Manor Way, Borehamwood
Hertfordshire, WD6 1QQ

Search News


When you can claim back VAT on purchase of a car

Source: HM Revenue & Customs | | 13/08/2019

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

Shared parental leave and pay
17/09/2019 - More...
The shared parental leave and pay rules offer working parents far greater choice as to how they share the care of their

Reporting changes that affect Child Benefits
17/09/2019 - More...
You must notify HMRC of certain changes to family life. For example, a change in your child’s or your

Tax relief for private pension contributions
17/09/2019 - More...
You can claim tax relief for your private pension contributions. The annual allowance for tax relief on pensions is

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

 

 

ICAEW-BLK RGB  

 

Save

Save

Copyright © 2019 - Goodier, Smith and Watts

Cookie Policy | Website Privacy Policy                                                                                                                                                                                                                                                         

Registered in England under the number 3724657