Generally speaking, the purchase of any vehicle where there is any element of private use means any reclaim of VAT may be restricted. HMRC’s website offers the following guidance:

·         You may be able to reclaim all the VAT on a new car if you use it only for business.

·         The car must not be available for private use, and you must be able to show that it isn’t, e.g. it’s specified in your employee’s contract.

·         Private use includes travelling between home and work, unless it’s a temporary place of work.

Due to the private use restriction, 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
  • for self-drive hire

If you are buying a commercial vehicle, you can usually reclaim the VAT. For example, a van, lorry or tractor. You can only reclaim the VAT if you use the vehicle in a business.

If they’re used only for business, you can also reclaim VAT on:

  • motorcycles
  • motorhomes and motor caravans
  • vans with rear seats (combi vans)
  • car-derived vans

If you are in any doubt that a proposed vehicle purchase is eligible for a VAT reclaim please contact us for advice. Reclaiming the VAT when a claim is in doubt will only attract the attention of HMRC.

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