VAT – Company cars in the motor industry
HMRC have published a new information sheet that provides new value based bands for calculating VAT using a simplified method known as car averaging. This change is relevant to motor dealers, car manufacturers and car hire businesses who allow the private use of company cars, demonstrator vehicles and rental cars.
The changes which came into effect on 1 May 2009 have been made so that the direct tax and VAT bands for private use are equivalent.
There are three different tables included in the information sheet which list the new value based bands for motor manufacturers, dealer demonstrators and for daily rental cars.