VAT on new cars
Discussion
I presume that when you buy a new car the dealer sends the VAT element off to the taxman.
When you finance, lease or pcp the purchase the consumer pays the vat as a part of the loan and therefore monthly , does the taxman then get the vat element monthly or on one lump sum from the dealer just the same as if the car was purchased outright ?
When you finance, lease or pcp the purchase the consumer pays the vat as a part of the loan and therefore monthly , does the taxman then get the vat element monthly or on one lump sum from the dealer just the same as if the car was purchased outright ?
The finance company purchases the car from the dealer for the full amount including VAT. The dealer then pays the VAT to HMRC.
The finance company then normally reclaims the VAT on the car purchase but charges VAT on the hire charges to the user which they then pay to HMRC as invoiced.
This is assuming it is a new, VAT qualifying car.
At least that is how it used to be.
The finance company then normally reclaims the VAT on the car purchase but charges VAT on the hire charges to the user which they then pay to HMRC as invoiced.
This is assuming it is a new, VAT qualifying car.
At least that is how it used to be.
confused_buyer said:
The finance company purchases the car from the dealer for the full amount including VAT. The dealer then pays the VAT to HMRC.
The finance company then normally reclaims the VAT on the car purchase but charges VAT on the hire charges to the user which they then pay to HMRC as invoiced.
This is assuming it is a new, VAT qualifying car.
At least that is how it used to be.
ahh but that would mean that cars that are financed have vat applied twice , is that correct ? The finance company then normally reclaims the VAT on the car purchase but charges VAT on the hire charges to the user which they then pay to HMRC as invoiced.
This is assuming it is a new, VAT qualifying car.
At least that is how it used to be.
liner33 said:
confused_buyer said:
The finance company purchases the car from the dealer for the full amount including VAT. The dealer then pays the VAT to HMRC.
The finance company then normally reclaims the VAT on the car purchase but charges VAT on the hire charges to the user which they then pay to HMRC as invoiced.
This is assuming it is a new, VAT qualifying car.
At least that is how it used to be.
ahh but that would mean that cars that are financed have vat applied twice , is that correct ? The finance company then normally reclaims the VAT on the car purchase but charges VAT on the hire charges to the user which they then pay to HMRC as invoiced.
This is assuming it is a new, VAT qualifying car.
At least that is how it used to be.
liner33 said:
ahh but that would mean that cars that are financed have vat applied twice , is that correct ?
Nope, on the contrary HMRC are only getting the VAT element in stages over the lease period so are reducing the total amount the finance company has to finance.When finance companies were first able to reclaim the VAT on the car about 20 or so years ago lease payments did drop.
Obviously when the finance company dispose of the car 20% of the proceeds will be VAT so will be paid to HMRC.
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