HMRC is considering a change to the electric pick-up truck payload VAT rule
HMRC may alter the electric pick-up truck payload VAT regulation for motorists. The revision from the tax authority and Labour Party government could enable more electric pick-up trucks to qualify for VAT reclamation by business users.
For double-cab pick-up trucks to be classified as commercial vehicles for VAT purposes, they must have a payload of at least one tonne. However, due to the weight of EV batteries, this is more challenging for electric trucks in comparison with diesel. Now, HMRC has issued a statement following appeals from the Society of Motor Manufacturers and Traders for a rule amendment.
The spokesperson said: "As part of those discussions, SMMT set out the commercial challenges faced by manufacturers of double cab pick-up vehicles in meeting the current payload tonnage requirement for electric vehicles, given the size and weight of batteries.
"SMMT has submitted a proposal suggesting a reduced payload threshold for electric DCPUs, which would allow them to be treated as commercial vehicles and enable VAT recovery on the purchase price. "We are considering this proposal. " The modification - which is not yet confirmed - would permit firms to reclaim nearly £8,000 on certain models, reports Birmingham Live.
JT Hughes clarifies the current regulations, stating motorists can reclaim if it's not a VAT "car" and it's used for your business.
"If it is a VAT car, purchase VAT is blocked unless used exclusively for business and not available for private use," it adds. Taxis, self-drive hire, and driving instruction are noted as specific exceptions. Common situations include full 100 per cent reclamations for wholly business use.
For mixed business and private use — where the vehicle does not qualify as a VAT car — drivers may either apportion the input VAT immediately or reclaim it in full and account for output VAT on private use during each return, using a fair and reasonable method. Where a vehicle is classified as a VAT car, purchase VAT will be blocked unless it is used exclusively for business purposes and is unavailable for private use.
VAT on repairs and maintenance can still be reclaimed in proportion to business use.
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