Usually, when claiming back VAT you just need to look at your receipts and invoices and claim back the amount of VAT recorded.
When it comes to motor expenses however, it becomes a little more complicated.
VAT on cars
Cars are considered a luxury item and therefore you normally cannot claim back any VAT on them. However, there are a few exceptions that VAT registered businesses can take advantage of.
If the car is used solely for business purposes (this means you cannot even have the car parked at your private address) you can claim the full amount of VAT. You can also claim the full amount if the car is mainly used as a taxi or a driving instructor’s car.
If the car is leased you can normally claim 50% of the VAT, or all of it if the above conditions apply.
If you hire a temporary car, you can claim 50% of the hire charge if it is to replace a company car that is currently unavailable. If you do not have a company car you can claim 100% of the VAT if you hire the car for no more than 10 days and it is only used for business use (as described above).
VAT on other commercial vehicles
If you buy a van that is only used for business, you can claim the VAT back on it.
You can also claim back the VAT on business-only motorcycles, motor-homes, car derived vans and combi-vans (vans with rear seats).
VAT on fuel
You can claim all of the VAT on fuel costs if your vehicle is only used for business purposes. Vehicles that are used for both personal and business use have three methods to claim VAT on fuel.
- reclaim all of the VAT while paying a fuel scale charge as shown on this link.
- Only claim VAT on fuel used in business journeys, this requires accurate mileage records.
- Choose not to claim VAT, useful if business mileage is negligible and you don’t want to pay the fuel charge to claim all of the VAT.
Please be aware that if you choose not to claim VAT on one vehicle’s fuel, you will be unable to claim any VAT on fuel for any vehicle.
VAT on other expenses
You can claim all VAT on other expenses such as maintenance or accessories, providing the expense is for business purposes. This can even be done if you cannot claim VAT on the vehicle itself.
VAT on used vehicles
To claim VAT on a used or second-hand vehicle you must have a copy of the invoice showing the amount of VAT. Without this, you will not be able to claim any VAT.
The above is accurate at the time of writing, however, please be aware that tax rules are subject to change frequently. With this in mind always double-check figures when reading our blogs using the links to the right.
If you would like any further advice or information regarding the above or VAT in general, please do not hesitate to get in touch.