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VAT directive derogation for private use of leased cars in UK

printer Mail

The Council implementing decision extending the UK’s VAT directive derogation permitting a 50% input tax deduction for leased cars not used entirely for business purposes was published in the EU official journal on 27 December. The new derogation will run until the earlier of 31 December 2022 or the effective date of the UK’s withdrawal from the EU.

The derogation authorises the UK to apply a 50% restriction on the right to recover input tax on charges for the lease or long-term daily rental of cars not used exclusively for business purposes. The derogation correspondingly allows the UK not to treat the private use of leased business cars as supplies of services for consideration. It thus removes the need for the hirer or lessee to keep detailed private mileage records for each of these cars, or to account for the VAT on the private use.

Issue: 1470
Categories: News