Can anyone advise on reclaiming VAT on motoring costs.
I have a client who has recently purchased a new vehicle, he is VAT registered, he has claimed all the VAT back on the purcahse of the vehicle, 100% business use.
My client is a limited company. I am presuming that he can reclaim VAT on all repairs etc to this business vehicle. What about modifications?
With regards to fuel used. What is the best way to reclaim VAT on fuel. Does he have to keep the receipts for fuel & then reclaim the VAT as used 100% for business. Is he allowed to use the 40p mileage rate or is this just for sole traders?
Also what about if he uses his personal car for business use, can he then pay himself the 40p per mile.
Don't know if you got to the bottom of this yet. But yes, the client can claim all VAT on repairs, services etc for the vehicle owned by the company. If the modifications are for the business then yes, he can claim VAT there too.
The way to claim the fuel is to keep all of the receipts. As the vehicle is exclusively used for the business then he can claim everything. With regards to the 40p per mile, I wouldn't even bother about it. That makes it easier to calculate when splitting between personal and business. In this instance it's easier to claim it all.
My understanding is that a limited company can claim the 40p per mile rate for personal cars, but maybe worth giving HMRC a call, they're really helpful
The views expressed in this post are my own personal (HRA protected) views, and are not representative of any organisation I have any involvement with.
If a personal car (or van) is used for business use, they can claim 40p per mile for the first 10,000 business miles in that tax year and 25p per mile thereafter.
If the business is vat registered they cannot claim mileage allowance, they have to claim actual costs. If they use the vehicle for private use, then you should use the vat scale charges for adding back private use(for vat ) and should add back at least 20% on the trial balance for corporation tax purposes.
Thankyou Farmergiles for your comments. Are these the rules if the business owns the vehicle? What if they have one car that was bought buy the business in full and they use their personal cars for minor business use, these are not put through the books as an asset.
Is it a case of claiming actual costs of the asset of the business and using scale charge if any personal use on the business vehicle. And keeping a record of the mileage for the business use of personal cars and claiming the 40p per mile just on these.
