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VAT on Commercial Vehicles

VAT ON PICKUP TRUCKS: 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. It is not the same as company car tax.

It is possible for a pickup to get classed as a commercial for VAT purposes.

Subject to company car tax in day to day use, it also involves two different sections of the HMRC. They each have their own set of rules.

The VAT aspect of buying a commercial vehicle, or selling it, is simple.

You have to pay VAT on commercial vehicles if they get bought from a person who VAT registered. There may be an exception if they did not pay VAT when they bought it themselves.

They must not have used it in their VAT registered business as well. These two situations almost never happen.

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 person.

An example, a private individual who is not registered for VAT bought a commercial vehicle from a VAT registered concern. Most car dealers are (or should be!). Thus, 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 price to that which is similar to the general 'trade asking price' inclusive of VAT. But, that is not the same as charging you the extra tax amount.

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. This is because you did not pay VAT on the 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) gets 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 that element back. But, you still have to find it in the first place out of your cash-flow.

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.

Note: Any time you buy 4x4 vans and commercial vehicles, the VAT must get paid at the point of sale.