VAT on VED for a leased vehicle

Pete_W

On April 1, 2025 Vehicle Excise Duty (VED) was instigated for Electric Vehicles (EVs).  This seems fair since I create as many potholes as a Diesel SUV.  My vehicle is currently leased.  The leasing company has told me that I will be billed separately for the VED AND that they would be charging me VAT on top of the amount.  As we all know, VED is not 'vattable'.  Does this seem like a strange thing for them to do?

la531983

No this is correct. There was another thread recently where someone asked the same question, and I posted the blurb from Leaseplan that came with my invoice for £30 (£5 of which was VAT)

Let me find it.

la531983

Found it, here you go.

VAT on Vehicle Tax — MoneySavingExpert Forum

400ixl

They are correct in that they charge VAT on top as it is part of a service.

One of the downsides of leasing where they deal with the VED.

facade

400ixl said:

They are correct in that they charge VAT on top as it is part of a service.

One of the downsides of leasing where they deal with the VED.

It is not so much a service as a recharge (the lease company incurred the charge, because it is the RK, and is passing it on to the customer). Recharges are subject to VAT

It can't be treated as a disbursement (which are VAT free) because it isn't the customer's responsibility to pay the VED- they are not the RK (the lease contract will absolutely allow for VED to be passed on as a recharge)

https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers

DullGreyGuy

facade said:

400ixl said:

They are correct in that they charge VAT on top as it is part of a service.

One of the downsides of leasing where they deal with the VED.

It is not so much a service as a recharge (the lease company incurred the charge, because it is the RK, and is passing it on to the customer). Recharges are subject to VAT

It can't be treated as a disbursement (which are VAT free) because it isn't the customer's responsibility to pay the VED- they are not the RK (the lease contract will absolutely allow for VED to be passed on as a recharge)

https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers

Which it fails because it because it must be:

• it was your customer’s responsibility to pay for the goods or services, not yours

The lease company is the registered keeper of the vehicle so its legally their responsibility to pay it not the customers

Pete_W

Thanks everyone for your comments.  It seems somewhat counterintuitive to me, however ... I'll just pay the VAT, not get worked up about it and move on with my life