Business leasing and VAT: what you can actually reclaim

Business lease rentals are quoted excluding VAT. What you reclaim depends on what the vehicle is and how it is used.

For a car available for private use — which covers almost every company car — you can generally reclaim 50% of the VAT on the finance rental. That is a blanket restriction and it does not require you to track journeys.

For a commercial vehicle used only for business, you can generally reclaim 100%.

The part that surprises people: VAT on the maintenance element of a rental is usually reclaimable in full, even on a car, provided it is itemised separately on the invoice. If you take a maintained contract, ask for the split.

Rentals are normally an allowable business expense against profit too, though for cars above a CO₂ threshold part of the rental is disallowed. Your accountant will know the current figure — this is a decision worth a five-minute call before you order, not after.