I am vat registered. I hired a van for business use for a month. How do I account all the expences, as I am not sure about the vat reclaim - as far as I know I can only reclaim 50% of it. How do I account it?
50% of the hire VAT may be claimed back but can the other 50% be included with the hire cost on my tax return? If not then how do I account for it on my accounts?
Hi Eric,
If you use the van solely for business purposes then I would expect you can reclaim the full cost of the VAT - I recommend you check this with HMRC.
If the full cost was for a business expense but you can only reclaim half you can have two lines in your Money Paid Out with different VAT rates. For example, if the van hire was for £980 you would have two lines as follows:
Line 1: £490 at 20% VAT
Line 2: £490 at 0% VAT
Regards
