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VAT rates for Lease Cars


We are VAT registered on Accural and we are about to take delivery of lease cars. I understand that we are able to recover 50% of the VAT paid. How do I ensure that the VAT reclaimed on these invoices is at 10%?


You can manually enter the sub-total and vat amount to match invoice total instead of entering as normal vat invoice. The attached image should help

Is this really the best way to handle this? It seems all wrong!

Hi @tdudgeon

What is it you’re trying to do?

I’m trying to do what was described in the original question.
My bills for car leasing include VAT at 20% but only 50% of that VAT is claimable on a VAT return.
Without any additional action those entries in the QuickFile VAT report are entered with the full amount of the VAT, not 50% of the amount.

Hi @tdudgeon

This article may help: Contract Car Hire and VAT

Yes, thanks. But that approach is ugly. It involves entering incorrect values that just happen to give the right answer. I’ve instead chosen to make an adjustment to the VAT return, which is also not a good solution.
Seems like there should be a specific category for this (“Vehicle leasing”) that handles the 50% factor in the VAT return (which of course is a special case), or a general solution where the proportion of VAT that can be claimed can be specified (default 100%).

Not really - if you’re being charged £120 including VAT and you can reclaim £10 of that on your VAT return then the correct net cost to your business is £110.

Hi Everyone

I have been using this way for the past year ugly or not it works. I have found it the best way and my accountant has said this is the best way to show the real cost to the business and reclaim the correct VAT. But people must use what works for them.

You can enter it line by line to make it more clear and separate out the VAT elements.
Surely even the linked method is better than a manual adjustment though?

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