You can usually reclaim the VAT paid on goods purchased for use in your business. However, with vehicles these often include an element of personal or private use
In our latest article we explain the rules regarding reclaiming VAT on vehicle purchases.
Generally speaking, the purchase of any vehicle where there is any element of private use means any reclaim of VAT may be restricted.
You may be able to reclaim all the VAT on a new car if it is used only for business. The car must not be available for private use, and you must be able to prove that it isn’t – for example if it is specified in your employee’s contract.
Private use does include travelling between home and work, unless it’s a temporary place of work.
It is unusual for vehicles to be restricted to zero private use and therefore, it is usual that no VAT can be recovered on the purchase of a car.
However, you may be able to claim all the VAT on a new car if it’s mainly used as a taxi, for driving instruction or for self-drive hire.
If you are buying a commercial vehicle such as a van, lorry or tractor, you can usually reclaim the VAT if you only use it for business.
Likewise, if they’re used only for business, you can also reclaim VAT on motorcycles, motorhomes and motor caravans, vans with rear seats (combi vans) and car-derived vans
If you are in any doubt whether a proposed vehicle purchase is eligible for a VAT reclaim there is guidance on the HMRC website or you can contact us for advice.
4 August 2020
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