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VAT on cars is a complex area
Most cars cannot have the VAT claimed back - vans, pickups etc all vat reg companies can claim some or all VAT back. Hence you see builders etc with £35K pick-ups that never carry building materials etc etc
Companies that are in day rent, driving schools, genuine demo vehicles in a garage can all claim the VAT back. However when they sell the car they have to charge VAT on the selling price.
EG Day rent car company pay £12,000 inc VAT for the Brand new car.
i.e. Car @ £10K + £2K VAT which they claim back. so they have paid £10K for car
6 months later they auction the car for £9,600
ie. £8,000 + £1600 VAT. The day rent car company now send £1600 to the VATMAN.
If the car is registered t a "normal company" or private buyer the VAT cannot be reclaimed.
Hence VAT qualifying car is a red herring for almost every company & man in the street.
When a VAT Reg Company Leases a car they can often reclaim 50% of the VAT on the monthly lease charge - hence leasing can be attractive to companies.
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