Hello. I am looking at leasing a commercial vehicle. Because the vehicle will be used for some personal use beyond incidental, I am only entitled to a partial (i.e. half) refund of VAT.
How would I go about accounting for this in my VAT returns?
e.g. payment is £100 + VAT @ 20% = £120. I only wish however to claim £10 of the VAT back, not the full £20.
You may be better off posting this to an accounting specific forum, or running it past your own accountant to ensure it’s recorded and accounted for correctly.
Check this with an accountant, I didn’t think the automatic 50% thing applied to vans, only to cars.
To do this, I would adjust box 4 on your vat return by deducting the amount of VAT you don’t want to reclaim on your purchases.
In QuickFile you click the red triangle to the right the calculated figure and adjust from there.
If you, say, paid £120 per month for 3 months lease giving £60 VAT, but you only want to reclaim £30 of that, click on the red triangle and enter -30 (minus 30) into the adjustment box.
This will reduce the input VAT you are claiming by £30.
Hope this helps.
And further to my post above, to record the vat element you want to reclaim when posting a purchase payment into QF, you can do the following:
When you create the purchase payment and the total is £120 including VAT, just change the payment figures to £110 + £10 VAT.
In this way, the software will only calculate input VAT of £10 for this transaction and you won’t have to make adjustments in any future VAT return.
Hope this helps,
Thanks Darren. That’s very helpful and answers the question.
Regarding the comment on vehicle rules, my understanding is that no VAT is refundable on non-commercial vehicles (hence the distinction between the two) but one for further investigation.
For leased cars 50% of the vat is also claimable, or if it’s not used for personal use like a pool car, then the full vat can be claimed back. See: https://www.gov.uk/reclaim-vat/cars
@George_H and what about for commercial vehicles?
There’s a section in the HMRC link that covers the typical 4 types of commercial vehicles that small businesses use, however it only covers vans used solely for business purposes as it’s just an HMRC guide.
There’s a few Van sellers that provide more in depth vat info on vans used partly for business, for example
Basically they say you can claim the same proportion of vat that the van is used for business purposes, which confirms what Neil said he was entitled to do with his 50% vat claim.