Leasing Car - Reclaiming Tax

techguy1988

Hi,

I recently decided to get a lease car, which is about £300+VAT per month.

I use this car almost 80-90% for business use, I probably use it about 10% for personal use.

I know I can claim the 50% VAT back, but is there any way I can claim the lease amount back each month also? I dont think I should have to pay the full lease (NET) amount if I am only using it 10% of the time!

Would appreciate any advice on this!

Please note: I own a Ltd company and I would like to reclaim some (if not all) of the amount of the lease payments.

Thanks.

taxing

techguy1988 wrote: »

Hi,

I recently decided to get a lease car, which is about £300+VAT per month.

I use this car almost 80-90% for business use, I probably use it about 10% for personal use.

I know I can claim the 50% VAT back, but is there any way I can claim the lease amount back each month also? I dont think I should have to pay the full lease (NET) amount if I am only using it 10% of the time!

Would appreciate any advice on this!

Please note: I own a Ltd company and I would like to reclaim some (if not all) of the amount of the lease payments.

Thanks.

You and your company are two different legal entities. Which one of 'you' has contracted with the leasing company?

If you personally, why do you think you should get the VAT back; you are not VAT registered: the limited company might be, but you are not.

If the agreement is in your own name and you pass the bill on to the company, you will have national insurance and P11D issues as this is your pecuniary (cash) liability and the company is paying your bill for you.

If the lease is 'yours' then the car is (for tax) your own and you can, in each tax year, charge your employer (your company) business mileage at 40p per business mile for first 10,000 miles and then at 25p per mile thereafter.

If the company has contracted for the lease and you (the employee) use the car for private (take it home etc) then you will have an assessable benefit in kind for the car and for fuel if the company pays that too.

Did you not discuss this transaction beforehand with your accountant - you should have done; and now should do so without delay.

Regards.

JasonLVC

The EU recently (December 2010) renewed the concession that allows the 50% VAT recovery on lease cars.....the concession has been extended to 2013 - thereafter, who knows whether the concession will be extended again or withdrawn and thus blocking input tax recovery on lease cars.

You can only reclaim 50% of the VAT charged on the lease/rental cost. If you had purchased the car through the business you would not be able to reclaim any input tax at all, so the 50% concession is a good deal.

You can reclaim 100% of any maintenance and repair costs of the vehicle (ie, if you have a service contract with the lease hire company or if you just get billed every time you buy a tyre or service, then the VAT is fully recoverable).

The above assumes the Ltd is VAT registered and is making taxable (VATable) supplies to customers. if not, the VAT may not be recoverable at all.

techguy1988

Hi,

I was advised by the HMRC that I could claim back 50% of the VAT because I wasn't able to put this against a new company. I HAD to do it as a personal lease and not a business lease because its a new company.

My question is really, as this is a pretty much a business car why can I not claim back any of the monthly repayments against the business?

Any

techguy1988 wrote: »

Hi,

I was advised by the HMRC that I could claim back 50% of the VAT because I wasn't able to put this against a new company. I HAD to do it as a personal lease and not a business lease because its a new company.

My question is really, as this is a pretty much a business car why can I not claim back any of the monthly repayments against the business?

Sorry, this doesn't make any sense at all.
Private person cannot claim VAT refund.

Why would a ltd company not be able to claim VAT refund? It doesn't matter whether the company is new or old, as long as it is VAT registered.

JasonLVC

techguy1988 wrote: »

Hi,

I was advised by the HMRC that I could claim back 50% of the VAT because I wasn't able to put this against a new company. I HAD to do it as a personal lease and not a business lease because its a new company.

My question is really, as this is a pretty much a business car why can I not claim back any of the monthly repayments against the business?

Forum member 'Taxing' has answered your query in #2.

The car lease expense is in your personal name - probably becuase the lease company would not lease to a NewCo due to no credit history.

You submit expenses to the business for the full cost (incl. VAT) of the car hire and the business refunds you the full amount (incl. VAT) so that you are not out of pocket.

The business then incurs an expenses of which it can only reclaim 50% of the VAT on the car hire so the business is out of pocket as a result.

There would then also be personal tax considerations to factor in as the company is paying for your car, so there will be additional direct taxes for you to pay as an individual.

Any

Aaah Jason now I see where the HMRC was coming from when they advised that... It wasn't clear from OPs post at all. Thanks.

OP if you privately lease the car and then submit expense to the company for the cost and you think you/company is out of pocket, then you need to understand that HMRC views you, as a private person having a car that is paid for by company and is available for private use as a BENEFIT and they don't see it as you/company being short changed but you as an employee being rewarded - just in non monetary terms and that is of course taxable...

Have a look through here on benefits provided by company and rules... http://www.hmrc.gov.uk/paye/exb/overview/

pongowaring123

I think what you are saying is you got the car in your name because the company was too new to gain finance in it's own right.

As it is PCH (Personal Contract Hire) you cannot claim a penny of the VAT back.

If it was a business contract you could benefit from the effective rental (which is the finance rental + half the VAT).

The only thing I can think of to help you is for you to charge the company each month for the car and that can go as a cost on the company's balance sheet.

The fact it is 'personal' means the company has nothing to do with it I'm afraid.