Car Leasing and VAT accounting

Hi Alan,

In this case, you can choose "Manual" as the VAT rate, type in £30 in the VAT value field and £360 in the gross value field.

Tommy

Hi Tommy, I tried that and it makes the unit price £330. I want to claim the lease cost as a deductible expense, so it needs to show £300

Hi Alan,

The unit price of £330 is correct as only half the VAT is allowable i.e. you will only receive 30 of the VAT back, so the business incurred a net cost of £330.

Tommy

I'm confused (again) as I need to claim £300 every month as an expense. That's what the leasing company charges me. By doing it this way I would be claiming £330 each month?

Hi Alan,

If the actual cost is 300 then the VAT would be 50. So the 50% VAT claimed would bring the net cost incurred to 275.

Tommy

Sorry for my confusion. The monthly bill is 300 plus VAT. I want to claim the 300 and get back half of the VAT The bank import will show an amount of £360 going out.

Hi Alan,

In that case, the unit price of £330 is correct as only half the VAT is allowable i.e. you will only receive 30 of the VAT back, so the business incurred a net cost of £330.

Tommy

Hi Tommy,

So, each month, am I claiming a taxable deduction of £300 or £330? (whilst claiming back £30 VAT )

You can only get back 50% of the VAT you paid, so just put the full £300 and, if your software lets you, modify the VAT to £30. For clarity, add a note like "50% VAT limit on car lease."