I have a car on lease hire and I see that I can only claim VAT for the finance at 50% VAT restriction. How do I account for that please?

Hi Peter,

Regarding your question about claiming VAT for the finance of your car
lease, can you please tell me why you cannot claim 100% of the VAT you
pay? Is it because you will use the car for personal use 50% of the time?

Hi Mark,

It's a company lease and the rules say that a person can only claim 50% of
the VAT for the Finance fee.

Hi Peter

To answer your question, here is our help topic on recording the purchase of a vehicle using a hire purchase agreement: https://www.solaraccounts.co.uk/help/how-to-record-a-hire-purchase-agreement

In your case on Step 1 enter two lines in the Purchase Invoice: One with VAT at 20% and the other with VAT at 0%. The VAT-inclusive price should be split
between the two lines

Thanks Mark.