Shopping for a used car, the terms Non VAT qualifying and Gross VAT qualifying will sooner or later show up. These terms are important for company cars; buying a car privately, it is of no importance.

The Non VAT qualifying cars are being sold under the taxation scheme called: Margin scheme. During the purchase the buyer has not reclaimed the VAT. In general these cars are privately owned, and can never become VAT qualifying.

The Gross VAT qualifying cars are owned by a business. The owner has reclaimed the VAT during the purchase and pays VAT after selling the car. When you buy such a car for your business you are able to reclaim the VAT too.

Private purchase

If you buy a new car privately, you are in the eyes of the tax department the end user. The VAT will be paid, and cannot be reclaimed like businesses are able to. When you are selling it on the used car market, no kind of buyer, business or private, will be able to reclaim the VAT.

If you buy a used car privately, you are not able to reclaim the VAT too. It does not matter from who you are buying a car, when you buy it, the car is Non VAT qualifying.

In short, if you buy a car privately, used or new, it will be Non VAT qualifying at the moment you sell it.

Business purchase

If you purchase a new car for your business, you will recover the VAT. This will make the car VAT qualifying and interesting for companies on the second hand market.
If you buy a used car for your business; take into account that you cannot reclaim the VAT on a non VAT qualifying car. Note, that used cars sold by private individuals or by a business under the margin scheme are non VAT qualified.

If you buy a used car under the margin scheme, however, you can sell it also under the same conditions. This means that you do not have to calculate VAT over the whole selling price, only over the possible profit. The bottom line is that you buy the best car for the best price, while calculating the VAT.

Are you looking for a used car that is VAT reclaimable? Try ex-leasers, these cars are business owned.