What is the VAT status on an unregistered car?

If I was to buy an unregistered car that is VAT qualifying, does that mean I need to pay VAT on top of the sale price. How can I tell the year of the vehicle?

Asked on 4 September 2016 by Peggy

Answered by Honest John
You can usually tell the year of manufacture by markings on the glass and on the plastics. All brand new unregistered cars are VAT qualifying. If they are purchased by, for example, a car rental company, it pays the VAT, then reclaims it as input tax from HMRC. If it re-sells the car, it then has to repay the VAT element to HMRC, which is calculated as sale price divided by 1.2 then multiplied by 20%.

If a car dealer buys the car, he then reclaims the VAT input tax on it in the same way, but when he sells it, he charges 20% VAT on his sale price and repays that to HMRC. The process ends when a private individual, buys the car and cannot reclaim the VAT input tax. From that point on, the VAT cannot be recovered. In my experience the price quoted for cars to a private individual who cannot reclaim the VAT will always include VAT. The price quoted for vans, LCVs and pick-ups will always be + 20% VAT.
Dear Honest John,

Please help me choose my next car. I would like it to have:
    Select a few terms below
Similar questions
I'm an Indonesian, I have a plan to go to the UK and buy some Mercedes-Benz cars without paying the VAT. I will export the car outside UK, to my country Indonesia. But few days ago I called Mercedes-Benz...
I have decided to consult your experience after my father’s unwavering belief in your reviews for years. I am a British army officer currently posted in Germany. Thus I am looking into the possibilities...
My question for you concerns the VAT increase (return to normal levels) implemented on 1st January 2010. I agreed to buy a Polo 1.6 TDI CR SE on 13 Dec from a VW dealership. This car had already been ordered...

Ask Honest John

Value my car