What is a VAT-qualifying Luxury Car? | GVE London – Blog

Luxury cars are the embodiment of opulence, offering a driving experience like no other. These vehicles are crafted with the highest-grade materials, often pioneering new technologies, and are equipped with powerful engines typically tuned for comfort rather than performance.

In the UK, when it comes to Value Added Tax (VAT), the term “luxury car” has a specific definition. A VAT-qualifying luxury car is a vehicle that meets certain criteria set by HM Revenue & Customs (HMRC). These cars are usually expensive and often found in a supercar showroom or trade showroom. But what exactly makes a car VAT-qualifying, and how does VAT affect the purchase and sale of these high-end vehicles? Let’s break it down.

What Makes a Car VAT-qualifying?

For a car to be considered a VAT-qualifying luxury car, it must fulfil a few requirements. One of them is its cost—it must be £40,000 or above to be subject to VAT when it is sold.

However, it’s not all about the price. The intended use of the car plays a major role in determining if VAT can be reclaimed. For example, if a car is purchased for business use and is used exclusively for that business, the buyer can reclaim 20% VAT from the purchase price. However, this varies on a case-by-case basis. Personal use vehicles are not eligible for VAT reclaims.

Supercar Showroom and VAT-qualifying Cars

A supercar showroom like GVE London is the perfect place to find luxury cars that are VAT-qualifying, as these showrooms often feature high-end cars like Ferraris, Bentleys, McLarens, and more. The high price tag of these cars often makes them eligible for VAT treatment.

If you purchase a vehicle from here for exclusively business use, you may be able to reclaim the VAT. Some businesses do require vehicles with a higher cost for their daily operations. However, it is always wise to check the details with a tax advisor before making a purchase.

Read Also: Process of Exporting & Importing Vehicles From The UK

Luxury Car Exports and VAT

VAT rules get even more complicated, or interesting, when it comes to luxury car exports. If you buy a luxury car in the UK and export it to another country, the sale may be exempt from VAT. That’s one of the major reasons why car enthusiasts around the world flock to the UK to purchase high-end vehicles.

VAT is usually not charged if the car is delivered to a destination outside of the UK in the case of luxury car exports. With that said, certain procedures must be followed to ensure the export is legitimate. The seller must provide proof of the car’s export, and all paperwork must be in order. If the car is exported to an EU country, different rules may apply.

Trade Showrooms and VAT-qualifying Cars

A Trade showroom presents a similar story to that of a supercar showroom. Cars here that are for resale typically tend to be high-end vehicles. They are usually subject to VAT, again, particularly if they are intended for business purposes. However, the rules can be tricky and require careful consideration. It’s always best to speak to a professional to understand the implications of VAT when buying from a trade showroom.

Conclusion

The rules around VAT are complex, but the reclaim you can get from it is also nothing to scoff at. Buyers must understand the tax implications related to buying these vehicles. To understand VAT better, contact GVE London. We can clarify all your doubts regarding VAT and other tax implications and give you a tour of our facility. We deal in luxury and high-end cars, offering everything from repair and servicing to detailing and custom modifications.