VAT on commercial vehicles

Claiming Back the VAT on Commercial Vehicles

16/01/2023tax , VAT

There are several businesses that have a clear understanding of how they can reclaim VAT on commercial vehicles. This is because the VAT input is allowed for commercial vehicles and it is blocked in the case of personal cars. However,  you must first learn to differentiate what is a commercial vehicle and how its use is different from your personal vehicles. Many of you say that there is no issue in identifying a commercial vehicle. However, it’s not as easy as it may sound. The common examples people tell are about transit vans and HGV, which is right to a certain extent also. Vehicle companies are more inclined these days to manufacture vehicles with a dual purpose. This is why it becomes a little complicated for common people to identify commercial vehicles.

Moreover, when you are carrying out a small business, it is imperative to keep yourself aware of the vat on commercial vehicles. You must gather information about the difference between commercial and personal vehicles. Also the use of dual-purpose cars, how is it beneficial for your business. This will help you to deal with these vehicles and make the most business benefit from the right kind of use of these vehicles. This guide is consciously compiled to explain the fact about what are types of cars that can input vat, how to reclaim VAT on commercial vehicles, how to check for VAT recovery on commercial vehicles, and what to consider before you plan to buy a commercial vehicle.


Reach out to our smart and clever-minded guys to get your VAT on commercial vehicle queries answered quickly. We will help to decide how to deal with your rules and their implications.


What are the Types of Cars that can Take the Input of VAT?

You are aware of the fact that you can only reclaim VAT on vehicles that are commercial and solely being used for business activities. Common examples of commercial vehicles are coaches, vans, tractors, and HGVs. Now comes the example of vehicles that are manufactured in a dual-purpose way. These are known as dual-purpose vehicles. These come under the category of commercial vehicles even when they are being used for other purposes as well. The market sells them as lifestyle vehicles. This is allowable for you to reclaim vat on this kind of vehicle fully. HMRC considered the following in the list of dual-purpose vehicles:

  • Caravans
  • Motorhomes
  • Motorbikes
  • Vans have the rare seats
  • Other kinds of vans


Is VAT charged on Commercial Vehicles”

VAT (Value Added Tax) is generally charged on commercial vehicles when purchased new. However, unlike regular cars, businesses can typically reclaim this VAT amount if they are registered for VAT and use the vehicle solely for business purposes. In the case of used commercial vehicles, the VAT situation can vary depending on whether the seller is VAT-registered and the method used for selling (e.g., margin scheme).


How can I Reclaim VAT on Commercial Vehicles?

Before you aim to reclaim vat on commercial vehicles, you must first identify when is the vehicle being used for business purposes and when is it being used for personal use. This is because the checker of VAT will most likely be interested in knowing and figuring out these details about the vehicle. In the case your vehicle is used for private use as well, you should make adjustments in the VAT accordingly. However, it is allowed to have occasional use of commercial use for the sake of private work as well. However, you must have the evidence to make a claim that the use was only incidental.

The good news is that you can reclaim VAT on the vans that you have bought only for your business commercial use. But in the case of dual-purpose vehicles that are partially being used for personal uses as well as commercial use, you will observe restrictions in reclaiming VAT for such vehicles.


Checking of VAT Recovery on Commercial Vehicles by HMRC

The recovery of VAT is genuinely checked when the inspection team comes from HMRC. This is specifically checked for commercial vehicles. Now if you have bought the dual purpose car, there will be a check the personal use if any and the inspection will be carried out accordingly.

The response of HMRC is usually aggressive in the case of dual-purpose vehicles that are being used for the purpose of personal activities and the reclaiming of VAT is added with full details. In another case of benefit in kind for direct tax, the VAT will not be reclaimed fully again. Otherwise, you will not find any restrictions in the recovery of VAT. If the private use is for a local trip to the nearest store, even then it is allowed for you to reclaim VAT fully.


A Practical VAT Tip to Consider Before Buying the Commercial Vehicles

In simple words, we can say that when you buy a vehicle to be used fully for business purposes, there will not be any VAT restrictions to reclaim. On the other hand in the case of dual-purpose vehicles, you are using it for personal use significantly. You will find the restriction in the input tax and what you can reclaim in VAT.


The Bottom Line

Now that you have gathered a fair amount of information about VAT on commercial vehicles, we can bring the discussion towards wrapping up. This is challenging for people to pay VAT when they are paying the prices of commercial vehicles. This is why HMRC allows reclaiming this amount of money. However, there are certain rules related to this. The rules have to be met for a successful claim. Also, ensure that the commercial vehicle is being used for business purposes only and that there is no involvement in private chores or relevant activities. This private activity will have to go into adjustment if there is any evidence of personal use. We hope these few minutes of reading will help you to develop a better understanding of VAT on commercial vehicles in the UK tax needs.


Our team of professional members loves to hear out your business problems and find out the possible and suitable solutions quickly for VAT on commercial vehicle problems. Call us or email us today. 


Disclaimer: The general information provided in this blog about VAT on commercial vehicles includes text and graphics. It does not intend to disregard any of the professional advice.

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main types of taxes
What are the Main Types of Taxes in the UK?

03/03/2023tax , Tax Issues , Tax News and Tips , Tax Saving Tips , Taxation

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How to Record VAT on Expenditure Invoices When Not VAT Registered


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