Motoring expenses part 2 – recovering VAT on expenses

The intricacies of the rules around motoring expenses and VAT recovery can be problematic. Sarah Kay, tax writer at Croner-i, examines the compliance issues around hiring and leasing costs, repairs and maintenance, road fuel and the charging of electric vehicles

It is important to note that this article relates to expenses incurred in relation to the running of a motor car.

Hire and leasing charges

The basic rule is that 50% of the VAT incurred on the hire or leasing of a motor car is subject to an automatic input tax block. The remaining 50% of the VAT is recoverable by the business according to the normal rules.

There are three main circumstances where this input tax block does not apply.

Your free features:

Breaking news and expert analysis
Customisable daily newsletters
Six free CPD learning modules each year
Personalised CPD tracker
Top 75 Firms league tables
Regulatory changes
Hardman’s Tax Data

Business | What happens when clients rely on bad tax advice from finfluencers?

Tax | Q&A: salary sacrifice and leased cars

Tax | Corporate hospitality and VAT: what can be claimed?

Tax | Q&A: VAT and personal use of work double cab pickup

Tax | Business tax changes from 1 April 2026

Navigate

Tax Services

Hire and leasing charges

Your free features:

Sign up to Business & Accountancy Daily