Buying a car at end of lease, and the VAT implications
Discussion
Pretty catchy title eh?! Anyway I'm a bit confused about what to do with my leased vehicle at the end of the term.
So the story is that i've got a people carrier used for private hire, and leased from the main dealer at around £500 per month + VAT.
When the lease ends (or at any point actually) they have said that I can buy it for a very attractive price (let's say £10k, and I could then sell for £20k) Except they then said I can't actually buy it myself, but can facilitate someone else buying it (who they say must be VAT regd), pay them their settlement figure and keep the balance.
As I understand it it's because I've already claimed the VAT on the repayments and so can't buy it myself, which I sort of get but don't really understand fully.
The price they quoted me is the total price, but I can't work out if there is VAT included in that or if there is a VAT element at all.
From whoever buys it's perspective, assuming they're VAT registered, would there be a VAT element for them to reclaim?
Why would the buyer need to be VAT regd-surely if the price suited them (even if it had VAT included) it's irrelevant.
Hopefully that makes some sort of sense-i'm thoroughly confused by the whole thing-and hopefully someone can give me an idiots guide!
So the story is that i've got a people carrier used for private hire, and leased from the main dealer at around £500 per month + VAT.
When the lease ends (or at any point actually) they have said that I can buy it for a very attractive price (let's say £10k, and I could then sell for £20k) Except they then said I can't actually buy it myself, but can facilitate someone else buying it (who they say must be VAT regd), pay them their settlement figure and keep the balance.
As I understand it it's because I've already claimed the VAT on the repayments and so can't buy it myself, which I sort of get but don't really understand fully.
The price they quoted me is the total price, but I can't work out if there is VAT included in that or if there is a VAT element at all.
From whoever buys it's perspective, assuming they're VAT registered, would there be a VAT element for them to reclaim?
Why would the buyer need to be VAT regd-surely if the price suited them (even if it had VAT included) it's irrelevant.
Hopefully that makes some sort of sense-i'm thoroughly confused by the whole thing-and hopefully someone can give me an idiots guide!
Yes - officially with any form of lease agreement, 'you' can't benefit from title at the end of the term, although a third party can purchase it. The purchase price that is offered will usually be inclusive of VAT - but note that the VAT on the purchase price is not then reclaimable again (unless the purchaser VAT registered AND is using the vehicle strictly for business use or it's a commercial vehicle).
Gassing Station | Finance | Top of Page | What's New | My Stuff