VAT Question on a trade-in

SwordofLight

1) If I am a sole trader and I am not registered for VAT, should a motor dealer be charging me VAT on the purchase of a van?

2) If I trade in a private car against a commercial van, and I am a VAT registered sole trader, do I charge that same motor dealer VAT? (and in turn he charges me VAT on a van)

Thank you !

premier10

SwordofLight wrote: »

1) If I am a sole trader and I am not registered for VAT, should a motor dealer be charging me VAT on the purchase of a van?

2) If I trade in a private car against a commercial van, and I am a VAT registered sole trader, do I charge that same motor dealer VAT? (and in turn he charges me VAT on a van)

Thank you !

Assuming the motor dealer is vat registered (very few are not)

1) A motor dealer will charge you vat whether you are vat registered or not.

2) The price you sell to the garage will be vat inclusive if you are vat registered or not.

The only difference to you is, if you are vat reg, you can claim vat back on a purchase but have to pay on a sale of vehicile.

SwordofLight

When you say the price I sell to the garage will be VAT inclusive, do you mean I sell for example for 1000 then charge 230 on top vat at 23%? So the garage is paying me 1230 for my car, and then I also pay vat on my purchase?

Bobby1984

No he is saying ignore vat altogether on the trade in of your private vehicle. Get the best price you can and there is no vat on it.

You claim back the vat on the purchase of the new van and when the time comes to sell that van, you will return the vat on the sale.