31 Oct 2023
The VAT treatment of motoring expenses is relevant to any business that incurs VAT on motor expenses. HMRC’s VAT notice 700/64 entitled 'Motoring expenses', which provides guidance on this topic, has recently been updated.
The new version of the notice replaces the previous version published in April 2022. The notice has been updated to explain the VAT rules when a business sells a second-hand vehicle in Northern Ireland that was purchased in Great Britain (England, Scotland and Wales, not including Northern Ireland).
The notice explains:
The notice also includes information on the VAT scale charge. If a business reclaims VAT on fuel that is used for private purposes, they must pay a VAT scale charge based on the carbon dioxide emission band of the car. This is a fixed charge that is not related to the amount of actual use.