company car VAT reclaim

arfur

arfur

arfur

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26 Nov 2006
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I'm thinking of buying a new car in Sept, I'm toying with the idea of either purchasing it myself or letting my business buy it and putting it down as a company car and paying tax, however can I reclaim the VAT if I put it through as a company car?

thanks
 
VAT cannot be reclaimed on cars, unless you manage to convince HMRC that is it solely for business use and will NEVER be used for personal use.

As such, you can pretty much only reclaim it on vans, trucks etc.
 
Speak to your accountant. If you haven't got one, get one before you think of doing anything like this.
 
csmager said:
VAT cannot be reclaimed on cars, unless you manage to convince HMRC that is it solely for business use and will NEVER be used for personal use.

As such, you can pretty much only reclaim it on vans, trucks etc.
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Wrong buddy. Input VAT is only restricted 50% on the finance element of the lease for company cars when the car is made available for private use. Other charges are fully allowable for input tax.

In other words if you had a lease profile that looked like this (net amounts):

Lease - £500 p.m.
Other misc. charges for admin etc. - £20 p.m.

Total VAT reclaimable per month would be £37.50 + £3.00 = £40.50.
 
Robbie G said:
Wrong buddy. Input VAT is only restricted 50% on the finance element of the lease for company cars when the car is made available for private use. Other charges are fully allowable for input tax.
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Quite so, but I was talking about buying it and not leasing it, as that seemed to be what the OP was asking.
 
csmager said:
Quite so, but I was talking about buying it and not leasing it, as that seemed to be what the OP was asking.
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You are right, but since you said "VAT cannot be reclaimed on cars" I assumed you were talking whatsoever, rather than only for an outright purchase, so I was providing an alternative to the OP. Crossed wires I think :).

Anyway arfur - csmager is indeed right in that you cannot reclaim VAT on a purchased vehicle unless it will be entirely unavailable for private use. Your best bet might be to lease and expense the charges against corporation tax. Up to a car price of £12k, lease costs are fully allowable for corporation tax. Over this amount, e.g. for a £20k car, the allowable expense would be £16k / £20k = 80%.
 
Getting a company car will reduce your annual tax free allowance for your income. This means you will begin to get taxed from a lower income.
 
Sash said:
Getting a company car will reduce your annual tax free allowance for your income. This means you will begin to get taxed from a lower income.
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Aye, but it can still work out considerably cheaper than having to buy and run a car yourself.
 
vonhelmet said:
Aye, but it can still work out considerably cheaper than having to buy and run a car yourself.
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Yeah I know, I was just making this aware in case people dont know. If you have too many company benefits this can give you a minus figure for tax free allowance meaning you get a special tax code.
 
thanks all,.

currently looking at the Suzuki Alto or Toyota Aygo - they work out at about £13 a month corp tax, I can live with that + the business only has to buy a cheap car, cheap road tax and up to 61mpg urban... BTW Its my business so the cheaper the better.
 
When I was looking at this; I found it worked out better to own the car myself and run it through as a 40p/mile expense. YMMV.
 
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