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UK VAT Rate on Vans and Pickups

For the most part, you will be paying an extra 20% Value Added Tax (VAT) to HMRC if you purchase a new van or pickup truck.

But, if the motor dealer who sold you the vehicle is running a VAT-registered business, you should be able to claim it back.

VAT Rules for New and Second Hand Vans

The 20% VAT rate on commercial vehicles is payable on almost all new vehicles no matter whether they are:

But, the actual classification of the vehicle determines which particular VAT rules you need to use.

The reason for this is simple. There are separate rules for cars and for goods vehicles, such as pickups, double cabs, and vans (including most heavy duty commercials).

Here's the thing:

HM Revenue and Customs (HMRC) may classify certain pickups as being commercials for the purpose of company car tax and VAT. The ensuing confusion usually relates to the model of the pickup truck and how it's being used.

The VAT aspect relating to the purchase of a commercial vehicle, or selling one, is quite simple. As a general rule, buyers pay VAT on vans (goods vehicles) if they buy them from someone who is VAT registered.

Pro Tip: This help guide focuses on explaining the process of VAT on vans and commercial vehicles in the United Kingdom. Another section explains company car tax rules (referred to as "Benefit In Kind" or BIK) in greater detail.

Not VAT Registered

What if the person you are buying from is a private individual who is NOT registered for VAT? In this case, you do not have to pay any VAT and that non-registered person has no right to try to charge it.

What if they paid VAT on the vehicle when they bought it? They still cannot charge you the tax unless they are a VAT registered business or individual.

A good example:

A private individual who is not registered for UK VAT bought a commercial vehicle from a VAT registered company, such as one of the major van dealers (e.g. Mercedes-Benz).

As a result, the dealer will be registered with HMRC (or should be) and they would have already paid VAT on the vehicle.

Later, if the new owner decides to sell it as a used vehicle, and is still non-registered for VAT, they cannot charge VAT to the next buyer.

They might "inflate" the vehicle price to something akin to the general "trade asking price" - as being inclusive of VAT. But, that is not the same as making a charge for the additional tax amount.

Likewise, if you are a VAT registered individual buying a commercial vehicle from a private individual who is not VAT registered, you cannot claim the VAT back from HMRC. In other words, you did not pay VAT on the original purchase.

Buying Commercial Vehicles

There appears to be no VAT rate on commercial vehicles - 4x4 and SUV makes and models - when you buy from dealers. This is because they are usually advertised for sale without the VAT portion added.

So, a vehicle advertised at say £15,000 from a trade source, then becomes £18,000 once the 20% VAT (£3,000) has been added on top.

It doesn't matter that you're not UK VAT registered and you simply want to buy one of your favourite 4x4 vans for domestic purposes. You still have to pay the levy if you buy it from a VAT registered source.

If You're Registered for VAT

The rules change somewhat if the buyer [you] is already registered with HMRC. In this case, you will be able to claim that portion back.

What if you sell the vehicle whilst registered for VAT? You have to add it to your selling price and then hand over that portion to the VATMAN.

Second Hand Commercial Vehicles

Let's say you're thinking about buying a used commercial vehicle (e.g. a second-hand Mercedes Citan panel van). In this example, three different VAT options exist:

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