Reclaiming VAT on Car Lease

KID77

Hello
Not sure if this is the correct forum so perhaps you can redirect me if not.

We have a car leased on a 4 year personal contract, almost finished and someone mentioned today that they lease a car but on a business contract. They said they get away with this because they show they get paid a company car allowance and car is used mainly for business so by doing this they don't actually pay VAT.

My question is, is there anyway we can reclaim the VAT we have paid over the last 4 years by showing this was used for business and we received an allowance. I am a private individual i.e. don't own a business but am employed by large company.

I know its a long shot but worth asking :-)

Thank you

booksurr

sorry, no chance at all, you are an employee and you are not yourself VAT registered therefore cannot claim a bean

leveller2911

Are you registered for VAT? If not then no chance...........

JasonLVC

To reclaim VAT, the cost has to be incurred by a VAT registered entity (the business), so the contract needs to be with the company/employer, not you (personal lease). Unless you are a sole trader/business.

Even if you put your personal lease cost through the business as an expense, then VAT law only allows 50% VAT recovery on the lease element by the business.

The business cannot reclaim 100% of the lease VAT (limited in law) unless the business argues it is a pool car used exclusively for business. So this means the car cannot be allocated to you specifically (which is a tough ask considering its a personal lease in your name!) and even if the lease was with the business directly and treated as a pool car, the vehicle cannot be removed from the work premises at night or used to go home in/personal journeys and so you need to keep logs to record these business miles only, its a real pain.

Basically, its really hard to reclaim 100% VAT on a lease car.


If you manage to get a "business" lease, all this means is that the quoted lease rental is ex-VAT, but VAT is then added on top - VAT is charged on car leases, whereas a personal lease will quote a VAT inclusive price. Business leases can sometimes be cheaper even factoring in the VAT, but most finance houses will only give a business lease to a business, the financial risks are different for the lease house as a personal customer is harder to get debts from.

KID77

Thanks for the replies guys :-)