VAT – Private use of company cars
HMRC have published a new information sheet entitled ‘VAT: Motor manufacturer’s company cars, dealer demonstrators, daily rental cars’. The information sheet updates the value based bands to take account of the increases in the standard rate of VAT (in January 2010 and 2011) for calculating VAT using a simplified method known as car averaging.
The information sheet 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 new tables are effective from the date the standard rate of VAT was increased:
- 1 January 2010 the standard rate of VAT was increased to 17.5%
- 4 January 2011 the standard rate of VAT was increased to 20%
There are three different tables included in the information sheet which list the updated value based bands for motor manufacturers, dealer demonstrators and for daily rental cars.