If you buy a vehicle to sell on, you can reclaim the VAT on your next VAT Return. You must be a VAT-registered motor dealer. When you buy a vehicle, the invoice will tell you how much VAT to pay.
Keep records when you buy a vehicle so you charge the right amount of VAT when you sell it.
If the vehicles are cars you must intend to sell them within 12 months to reclaim the VAT.
VAT on imported vehicles
You normally need to use Notification of Vehicle Arrivals (NOVA) within 14 days of importing a vehicle into the UK.
You do not need to use NOVA if any of the following apply:
- the vehicles have engines below 49cc, or 7.2 kilowatts (about 9.65 horsepower) if they’re electric
- you’re using a secure registration scheme
If your customer changes their mind about how to use the vehicle and you can no longer use a secure registration scheme you must use NOVA instead within 14 days of your customer letting you know.
Log in to use the NOVA service.
You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you log in.
If you’re bringing lots of vehicles into the UK, you can attach a spreadsheet that lists all the vehicles when you use the NOVA service.
What happens next
HM Revenue and Customs (HMRC) will confirm the VAT due when they’ve processed your NOVA form.
Pay VAT through customs on vehicles you import from:
- outside the UK to Great Britain (England, Wales and Scotland)
- outside the EU to Northern Ireland
You can reclaim the VAT on your next VAT Return.
If you are bringing a vehicle from the EU into Northern Ireland, account for it as an ‘acquisition’ on your next VAT Return.
Vehicles you do not sell
You can reclaim VAT on vehicles you use for:
- daily rental to customers
- test drives
- courtesy cars for your business
You have to pay VAT back to HMRC if a vehicle is also used privately, for example if an employee uses a car at weekends. To work out how much VAT to pay, read section 25 (‘Agreement with the Retail Motor Industry Federation’) of VAT Notice 700/57.
Stocking cars you do not own
You can also reclaim VAT on charges for stocking cars you do not own before you sell them.
Work out what VAT to charge when you sell a vehicle.