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Personal use of Van & VAT restrictions

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I have got myself in a bit of a muddle and would appreciate any feedback.

We have just taken on 3 contract hire vans which will have personal use by the drivers. All fuel is paid for by the company. We did some workings and would expect a 60/40 business to personal split. 

I am a bit confused about the following

1. Are there any VAT restrictions on the Van lease costs in the same way we have for cars?

2. In terms of the VAT on personal use fuel, i understand the scale charges apply to cars only. Firstly, is that correct? and if so, what are the rules for Vans?

Many thanks in advance. 


Replies (6)

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By Accountant A
13th Jan 2020 11:47

You should discuss this with your accountant.

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By lesley.barnes
13th Jan 2020 12:18

A fuel scale charge does not refer to a van.

The use of the van needs to be dealt with as a benefit in kind PAYE.

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Replying to lesley.barnes:
By chrisgreen83
13th Jan 2020 12:26

Thanks for the reply.

No issues with the benefit that has been done. Just the VAT restrictions that has me puzzled...mainly as i am used to cars as company vehicles rather than Vans. I did initially assume, as there was still personal usage, then there would be some equivalent VAT restriction!

The link talks about loans to subcontractors so not sure if applies to employees?

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By [email protected]
13th Jan 2020 15:36

It's worth you checking the legislation on HMRC as the waters are somewhat muddy when it comes to Van's
1) The rules for BiK are different to VAT - qualifying for one does not necessarily mean it qualifies for the other...
2) There is a seperate set of BiK rules for Vans which you'll need to look through
3) It will be worth talking it through with your accountants as the costs of getting it wrong could be significant.

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Replying to [email protected]:
By chrisgreen83
13th Jan 2020 15:49

Thanks. It is just the VAT, rather than BiK, i am struggling with. Perhaps the VAT rules are a bit more complex than i imagined so i will see what the accountants think.

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By Malcolm Comrie
17th Jan 2020 14:26

Have your Accountant look at VAT Notice 700/64 Motoring Expenses. Section 6.1 deals with private use charges for cars or other vehicles where 100% of the VAT has been recovered. The private use restriction is only due when all the VAT is recoverable. As there is no input tax block for vans intended for use for a taxable business purpose a private use charge may/will be due where there is personal use. The notice states ‘you may have to account for VAT’, but it’s likely a PU charge will apply.

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