This article explains the rules for recovering input tax on motor car expenses for businesses. If a business purchases a car outright, no input tax can be claimed except for taxi or driving instructor businesses. Hire purchase and lease hire also have limitations on input tax recovery, with a 50% block on VAT for rental payments. Personal contract purchases are more complex, with the distinction between services and goods depending on the final payment. Input tax on repairs can be 100% reclaimed if the vehicle is used for business purposes.
Source Marcus Ward
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