Knowing about VAT on used cars in Ireland and the UK is important for both buyers and sellers. This guide helps simplify the rules, from understanding when VAT applies to dealing with importation. So, if you're buying or selling, understanding VAT regulations helps you make smart choices and follow the law. Let's break down VAT on used cars in Ireland and the UK.
In Ireland, if you buy a used car from Great Britain, you typically pay 23% VAT on everything: the car's price, shipping, insurance, and taxes. However, if the car was in Northern Ireland for some time and not just brought from Great Britain, you might not have to pay VAT. If VAT applies, it's 23% of the car's value.
In the UK, if you're selling a used car as a regular person, you don't pay VAT. But if you're a car dealer, you might have to. Northern Ireland's rules of VAT on 2nd hand vehicles are now more complicated because of Brexit.
Is there VAT on second hand cars in Ireland? In Ireland, VAT on used cars depends on who you're buying from. If it's a registered car dealer, VAT, usually around 23%, is usually included in the price they advertise. But if you're buying from a private seller, there's no VAT to worry about.
When importing a used car, the rules differ based on where it's coming from. From Great Britain (GB), you'll generally face a 23% VAT charge on the car's total value.
However, if you're importing from Northern Ireland (NI), it gets complicated. If the car has been privately owned in NI for a while and wasn't just brought in from GB, you might be exempt from VAT. But if VAT does apply, like if it's a recent import from GB, expect to pay that 23% on the import's value.
Northern Ireland, under the trade agreement, still aligns with EU regulations. Vehicles coming from Great Britain into Northern Ireland must pass through customs, possibly incurring customs duties. Importing a vehicle from Great Britain requires a customs declaration. For new vehicles from the UK, no customs duty is levied.
Also Read about; VAT on Car Lease: A Comprehensive Guide
Did you know?
There's no VAT to pay when buying a used car from a private seller in both Ireland and the UK.
If you're purchasing from a private seller, you won't encounter any VAT charges. However, if you're buying from a registered car dealer, the price you see typically already includes VAT, set at the standard rate of 20%. You won't have to do any separate calculations for VAT.
There are some exceptions, though: Occasionally, a dealer might opt for a different VAT scheme. In this case, they might charge VAT based on the difference between what they paid and what they're selling the car for, known as the margin scheme. Interestingly, dealers aren't required to inform you which scheme they're using.
However, used vehicles from Great Britain are subject to customs charges. Conversely, vehicles originating from the EU or other countries like Japan or the USA require customs duty payments.
The total cost of a used car and VAT included, can often exceed expectations. This means that VAT can significantly affect the final price you pay for a used car in Ireland and the UK. Here's an example of how VAT impacts prices in both countries.
| Country | Car Price with VAT | Car Price without VAT | VAT Impact |
|---|---|---|---|
| Ireland | €10,000.00 | €8,130.08 | €1,869.92 (23%) |
| United Kingdom | £10,000.00 | £8,333.33 | £1,666.67 (20%) |
In both countries, if you're a registered car dealer, record-keeping is essential for VAT transactions, including purchases, sales, and VAT collected or paid.
Additionally, ensure you understand the specific VAT on 2nd hand vehicles from Great Britain or Ireland, and stay updated on the complexities of VAT rules in Northern Ireland post-Brexit.
For UK car dealers, familiarity with the VAT margin scheme and its record-keeping requirements is vital. Regardless of whether you're buying from a private seller or a dealer, always obtain receipts or invoices, as they're essential for VAT purposes and potential disputes.
In Ireland, when you buy a used car, you usually have to pay VAT at a rate of 23%. This VAT is calculated on everything you pay for the car: its price, how it gets to you, insurance, and even customs fees.
Similarly, there’s a common question: do you pay VAT on second hand cars that are imported? When you import a used car, you'll probably have to pay VAT too. Just like in Ireland, this VAT is added to the total cost of the car, which includes its price, the cost to ship it to you, and any import duty you have to pay, usually around 10%.
Also Read about; What is VAT on Fuel in Ireland?, Fuel Expenses & their Rates
In both Ireland and the UK, VAT on vans is charged at the standard rate. In Ireland, it's 23%, included in the dealer price but not charged by private sellers.
Similarly, in the UK, private sellers are not subject to this tax. Instead, dealers include it in the price they charge. After Brexit, Northern Ireland's VAT laws might become more complex. Therefore, it's best to check UK government resources for more information.
Conclusion
Understanding VAT on used cars in Ireland and the UK is crucial for both buyers and sellers. In Ireland, VAT rates differ depending on whether you're purchasing from a private seller or a registered car dealer, with additional considerations for imports from Great Britain or Northern Ireland. Meanwhile, registered dealers in the UK generally include VAT in the price, but exceptions exist, such as the margin scheme.
FAQs
Are second hand cars in the UK subject to VAT?
Yes, second hand cars in both the UK and Ireland are subject to VAT.
Does VAT apply to second hand cars in Ireland?
Import duty for cars from the UK to Ireland varies, but VAT is generally applicable.
What is the import duty for cars from the UK to Ireland?
When importing cars from the UK to Ireland, the import duty varies based on factors such as the vehicle's value and origin. However, VAT is typically applicable to such imports.
Rían Doyle
I'm a VAT professional with years of experience helping businesses with compliance and reporting. My goal is to simplify VAT calculation and provide valuable insights through my engaging writing style and clear explanations of complex concepts.
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