VAT Qualifying Cars - please explain
Discussion
Hello
I have seen cars advertised second hand as VAT qualifying. Some of these are serious gas guzzlers. Which brings the question why bother? Surely the Benefit In Kind Tax would be so high based on the emissions and the New Price then who would want to go down this route?
The only reason I can think of is they are to be used for private high and then there is no personal tax on these. Is that right?
I have seen cars advertised second hand as VAT qualifying. Some of these are serious gas guzzlers. Which brings the question why bother? Surely the Benefit In Kind Tax would be so high based on the emissions and the New Price then who would want to go down this route?
The only reason I can think of is they are to be used for private high and then there is no personal tax on these. Is that right?
Vat qualifying cars are the 2nd hand resale of a car where the VAT was recovered on original purchase. Usually dealer demos, taxi’s, lease cars etc – nothing to do with gas guzzlers….. if you are talking company car tax – then its paid on list price/emissions calc, regardless of anything paid
In general you’d be brave to recover on a pool car as they cannot do any private miles….. so if someone used it to get the newspaper then you’re in trouble. Easier to drop the vat than police every mile
If you thought you were clever recovering on a Ferrari that you drive for the occasional private hire then you’ll fall down here….
Just a quirk – have to advertise a car inclusive of VAT and if there is VAT to be displayed on the invoice you need to state this.
Handy for exporters – as you can in circumstances recover the VAT e.g. export out of EEC
In general you’d be brave to recover on a pool car as they cannot do any private miles….. so if someone used it to get the newspaper then you’re in trouble. Easier to drop the vat than police every mile
If you thought you were clever recovering on a Ferrari that you drive for the occasional private hire then you’ll fall down here….
Just a quirk – have to advertise a car inclusive of VAT and if there is VAT to be displayed on the invoice you need to state this.
Handy for exporters – as you can in circumstances recover the VAT e.g. export out of EEC
I think there is a benefit of setting up a separate company to handle the vat/leasing arrangement rather than using your main trading company. I'm not sure of the details.
I know of someone who has an expensive car addiction, the above is how he does it. There are savings but there's a lot more to loose in depreciation if you choose incorrectly.
I know of someone who has an expensive car addiction, the above is how he does it. There are savings but there's a lot more to loose in depreciation if you choose incorrectly.
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