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VAT on Commercial Vehicles

VAT on Vans Explained - Tax is payable on the purchase price of 4x4 pickup trucks and double cabs but other VAT regulations also apply to vans and 4x4s.

This information is specific to the buying and selling of commercial vehicles which is not the same as BIK company car tax.

It is possible for a pickup to be classed as a commercial for VAT purposes, but subject to company car tax in day to day use, two different sections of the HMRC are involved - each with their own set of rules.

The VAT aspect of buying a commercial vehicle - or selling it - is very simple. You have to pay VAT on commercial vehicles if they bought from a person who is registered for VAT – unless they did not pay VAT when they themselves bought it, and have not used it in their VAT registered business (almost never happens).

Not Vat Registered

If the person you are buying from is a private individual who is NOT registered for VAT they you do not have to pay any VAT and that non-registered person has no right to try to charge you VAT. Even if they paid VAT on the vehicle when they bought it, they cannot charge you VAT unless they are a VAT registered person.

So for instance, if a private individual who is not registered for VAT bought a commercial vehicle from a VAT registered concern – as most car dealers are (or should be! They would have had to pay VAT on the vehicle.

If they later decide to sell it, and are still non-registered for VAT, they cannot charge you VAT as such. They may inflate the vehicle’s price to that which is similar to the general ‘trade asking price’ inclusive of VAT, but that is not the same as charging you VAT.

Likewise, if you are a VAT registered person, buying a commercial vehicle from a private individual who is not VAT registered, you cannot claim any VAT back from HMRC, for the very simple fact that you did not pay VAT on the purchase!

Buying Commercial Vehicles

There appears to be no VAT on commercial vehicles - 4x4 or not – when you buy from dealers because they are usually advertised for sale without the VAT portion added. So, bear in mind that a vehicle advertised at say £15,000 from a trade source, then becomes £18,000 once the 20% VAT (£3,000) is added on.

It does not matter that you may not be VAT registered or may simply want this dream 4x4 commercial for domestic purposes - you still have to pay the VAT if buying from a VAT registered source.

Sometimes, the VAT question is not posed by the seller until you have fallen in love with your future dream 4x4. After all, £15,000 sounds - and is - a lot less than £18,000.

Vat Registered

If you are VAT registered, then of course you can reclaim this VAT element back (£3,000). But, you still have to find it in the first place out of your cash-flow. By the way, however you buy your 4x4 commercial double cab pick-up or other commercial 4x4, the VAT has to be paid at point of sale officially.

Again, if you sell the vehicle whilst you are registered for VAT, you have to add VAT to your selling price, and then hand over the VAT element to the VATMAN.