VAT on Car Lease Calculator
VAT-registered businesses can reclaim VAT on car lease payments, but HMRC restricts the amount if the car has any private use. Enter your lease details to see how much VAT is reclaimable each month and year.
Frequently asked questions
Why can I only reclaim 50% of the VAT on a car lease?
HMRC VAT Notice 700/64 applies a 50% input tax block on car leases where the car has any private use by an employee or director. This is a fixed 50% restriction — it does not matter whether private use is 5% or 50%. The only way to reclaim 100% is to demonstrate the car is exclusively for business with zero private use.
Does the 50% block apply to vans?
No. The 50% input tax block applies only to cars. Vans, pickups (with a payload over 1 tonne), and commercial vehicles are not subject to the block, and 100% of the VAT on their lease can be reclaimed provided they are used for business purposes.
Can I reclaim VAT on a hire purchase car?
No. VAT on the purchase of a car (including hire purchase) is generally not reclaimable unless the car is used exclusively for business, is a qualifying vehicle (taxi, driving school car, etc.), or will be sold with VAT charged. The 50% block rule applies specifically to leasing and contract hire.
What counts as private use for VAT purposes?
Any journey that is not directly related to business counts as private use. This includes commuting from home to a permanent workplace, personal errands during the day, and weekend personal trips. Even occasional personal use means the 50% block applies to the entire lease.
These calculations are estimates based on 2026/27 HMRC and DVLA rates. Speak to a lender or qualified financial adviser for a personalised quote.