The second-hand motor vehicle scheme allows businesses to make a claim on the Value Added Tax (VAT) related payment when buying second-hand motor vehicles in Great Britain. This scheme has not yet been introduced in Northern Ireland, but it is set to take effect from 1st May 2023.
Who is eligible to claim Second-hand Motor Vehicle Scheme?
The second-hand motor vehicle scheme is available;
- to businesses that are registered for VAT in Great Britain and
- have incurred costs on second-hand motor vehicles that are used exclusively for business purposes.
If you buy a second-hand vehicle in Great Britain and move to Northern Ireland, you will still be able to make a claim on the second-hand motor vehicle scheme.
How do I calculate my second-hand motor vehicle scheme-related claim?
In order to make a valid second-hand motor vehicle-scheme-related claim the following must be provided;
- A copy of your VAT registration certificate
- A copy of the second-hand motor vehicle invoice
- Proof that the second-hand motor vehicle is used exclusively for business purposes The second-hand motor vehicle scheme-related claim must be calculated as follows;
Firstly, add up all the costs incurred in purchasing a second-hand motor vehicle. This should include the purchase price, any delivery costs and any other associated costs.
Secondly, calculate the second-hand motor vehicle scheme-related claim as a percentage of the total cost. The current rate is 20% of the total second-hand motor vehicle cost, including VAT.
How does a second-hand motor vehicle scheme work?
Once you have calculated your second-hand motor vehicle scheme-related claim, you can submit your claim to HMRC. You'll need to provide the following information;
- Your VAT registration number
- The second-hand motor vehicle invoice
- Proof that the second-hand motor vehicle is used exclusively for business purposes
The Intention of Reselling the Vehicle
You must hold on to the evidence that you intend to sell the vehicle.
You can use the scheme unless you intend to move it to Northern Ireland to resell it or you keep it to do some repairs first, then resell it.
Once your second-hand motor vehicle scheme-related claim is approved, you will receive a cheque in the post. The second-hand motor vehicle scheme is available to businesses registered for VAT in Great Britain and those that have incurred costs on second-hand motor vehicles used exclusively for business purposes.
Once the claim is submitted, HMRC will process it and if successful, you'll receive your second-hand motor vehicle scheme-related payment. It's important to note that this payment can only be used for second-hand motor vehicles purchased in Great Britain.
How can we help?
Debitam Aster can help you understand second-hand motor vehicle scheme-related payments and how to make a successful claim. We provide a hassle-free service and ensure that all the required documents are provided in order for your second-hand motor vehicle scheme-related claim to be processed quickly and efficiently.
