We explain how VAT on cars works for exporting. Understand what is a VAT qualifying car and a non-VAT qualifying car. How to tell if a car is VAT qualifying car, how to reclaim the VAT when you export a car.

VAT on UK cars

UK cars have 20% VAT applied in their advertised price. The VAT is deductable if you buy a VAT qualifying car and export it permanently from the EU. Reclaiming the VAT on a car makes buying a VAT Qualifying car very attractive for export.

What does VAT qualifying mean?

A VAT qualifying car is a car which is eligible for the 20% VAT to be reclaimed.

What does non-VAT qualifying mean?

A non-VAT qualifying car is not eligible for the 20% VAT to be reclaimed. This is because the vehicle has been owned by a private individual. Once this has happened a car looses its VAT qualifying status to become non-VAT qualifying. This cannot be reversed.

What does 'VAT margin car' mean?

A VAT margin car is a car which is non VAT qualifying. This is because the VAT has been paid on it in a previous sale and this cannot become a VAT qualifying car again.

Do you pay VAT on new cars?

All new cars are VAT qualifying. They have to be bought by a VAT registered business in the UK in order for the VAT to be reclaimed. If this happens, the car remains a VAT qualifying car until it is bought by a person or a non-VAT registered business. This person must pay the VAT for the car which then becomes a non-VAT qualifying car ongoing.

Do you pay VAT on second hand cars?

If you find a used car which is still vat qualifying (or gross vat qualifying) then the VAT can still be reclaimed if bought in the correct way.

Many second hand cars are non-VAT qualifying as they have been owned privately. This means that the vat will always have to be paid on the car, regardless of who buys it or where it goes.

Do you pay VAT on electric cars?

Yes UK VAT is applied to electric cars in the same way it is applied to petrol or diesel vehicles. The same rules for reclaiming VAT on electric vehicles applies in the same way.

How to tell if a car is VAT Qualifying

Some dealers will advertise their car as VAT qualifying. But often is it omitted in the advert. It’s best to ask the dealer directly. This can be risky as non-export dealers are often put off by the idea of exporting a car and don’t want to get involved with reclaiming the VAT from HMRC. So you may find they are dismissive and don’t want to help. We frequently make the call on behalf of our clients. This removes the barrier of export- as it becomes a UK sale. This allows us to manage the purchase, reclaim and export smoothly.

How much VAT can I claim back?

To calculate the 20% accurately, take the advertised price and divide it by 1.2. This will give you the Vat free price. For example: £60,000 divided by 1.2 = £50,000. You can cross check this with making sure that the VAT is one sixth of the original advertised price.

List of VAT Qualifying cars

Our list of VAT qualifying cars featured on our stock page shows you the VAT qualifying cars which are currently for sale in the UK. This provides a helpful shortcut to find VAT qualifying cars. It’s not a definitive list but covers a large proportion of the UK, so if there’s something specific you are looking for then get in touch and we’ll be happy to help.

How do I reclaim the VAT on cars for export?

You have several options to consider if you want to buy a UK car and reclaim the VAT.

  1. Apply to reclaim the VAT yourself. Whilst you may know someone who has done this in the past, this is no longer possible since the law changed and stopped non VAT registered people reclaiming VAT.
  2. A dealer wants to return the VAT to me post sale. Another high risk strategy as you are in a different continent. We hear of many examples where the money never materialises owing to an ‘admin error’.
  3. My friend in the UK could reclaim the VAT. Being a UK resident isn’t enough. Your friend would have to be the registered owner of a UK VAT registered business. They would then process the application for you.
  4. Buy a VAT qualifying car from a UK main dealer. It is very unlikely that UK dealers will support you. Cars are in such short supply they are prioritising selling to UK clients. Most UK main dealers are not set up to support VAT reclaim, so will refuse the sale in the initial conversation.
  5. Buy via a professional car exporter. This is the most cost effective and straight forward way to buy your car VAT free. We do not ask you to cover the VAT in your purchase so you will be quoted the VAT free price from the outset. Processing the reclaim is a standard part of our export service.

Buying a car VAT Free.

A professional car exporter will buy the car on your behalf and sell you the car VAT free. You won’t need to send the money for the VAT. Just pay for the agreed cost of the car and the export service. They will cover the VAT for you and manage the VAT reclaim as part of their export service.

At MHH International, we spend the time finding the VAT qualifying cars for sale and sharing them with you. Once you have decide which car is for you, we buy the car on your behalf and sell it to you VAT free so you make the 20% saving off the retail price immediately. No need to pay the VAT and wait for your money to be returned.

Already found a VAT qualifying car?

If you have already found a car in the UK , no problem. We are always happy to step in and manage the purchase of a car you have found in the UK. Firstly checking the VAT qualifying status for you, verifying the spec and quality before buying and exporting it to you.

Export a VAT qualifying car VAT free today.