Tax-Free UK Car Exports

Yes, if the car is bought the right way. A VAT-registered seller, such as us, can sell a new or used car without VAT, known as zero-rating, when the car is exported and HMRC’s conditions are met. On a VAT-inclusive price the VAT is one-sixth of the price, which is 20% of the price before VAT.

VAT — Value Added Tax — is a general consumption tax assessed on the value added to goods and services, and it applies to more or less everything bought and sold for use or consumption in the UK. HMRC collects it at a standard rate of 20%. Exports of goods are normally zero-rated, which is where the saving comes from.

We are VAT registered as part of a VAT group. When we buy a new or VAT-qualifying car from a dealer, the dealer charges us VAT, which we recover through our VAT registration, and we sell the car on to you zero-rated when we export it. Where VAT applies to our charges, your quotation shows it.

If you buy a car yourself and the dealer charges you VAT, we cannot get that VAT back for you, so talk to us before you buy rather than after.

VAT on New Cars

A brand new car sold in the UK carries VAT at 20% on its price before VAT. We buy the car from the dealer and can sell it to you zero-rated for export if you live outside the UK, or are a business with no place of business here. We must export the car within three months, it must not be used or delivered to you here first, and we must hold proof of export. If you live in the UK and are moving abroad, the Personal Export Scheme below may suit you instead.

VAT on Used Cars

A dealer selling a used car under the second-hand margin scheme accounts for VAT only on its margin: a sixth of the difference between what it paid for the car and what it sells it for. There is no VAT on the rest of the price, so there is much less to save on a car like that, and HMRC does not allow a car sold under the margin scheme to be zero-rated as an export. The exception is the one below, and it is the one worth looking for.

What Is a VAT-Qualifying Car?

A VAT-qualifying car is a used car that has to be sold with VAT on the full price, because VAT was reclaimed when it was bought — typically an ex-rental or ex-lease car, bought by a hire or leasing company that recovered the VAT. A car like this cannot go through the margin scheme, so when we buy one and sell it to you for export, the full VAT can come off. A used car that is not VAT-qualifying cannot give you that saving, however good the deal looks.

HMRC’s Personal Export Scheme

If you are leaving the UK with the car for at least six months, as an overseas visitor or as a UK resident moving abroad, the Personal Export Scheme lets you buy a new or used car free of VAT and drive it here before it goes. Only a business that operates the scheme can sell under it, and we do not, so you buy from a dealer that runs it and complete form VAT 410 with them. An overseas visitor who lives outside the EU must export the car within 12 months of delivery, and a UK or EU resident within 6 months. If it is not exported in time, the VAT you did not pay becomes payable. We can find a dealer that runs the scheme and ship the car when you are ready.

If Your Business Is VAT Registered in the UK

A business registered for VAT in the UK can reclaim VAT on a car only in limited cases, for example where the car is used exclusively for the business or bought by a dealer as stock. That is between the business, its accountant and HMRC.

We find the car, confirm that it is new or VAT-qualifying, buy it from the dealer and sell it on to you, the overseas buyer, zero-rated. We handle the collection, the UK export declaration and the shipping, and keep the proof of export HMRC requires. We buy and sell on every car we source, and in a chain of sales HMRC lets only the sale to the overseas buyer be zero-rated (VAT Notice 703, paragraph 4.1). That sale is ours, so the dealer charges us VAT, which we recover through our VAT registration, and our invoice to you shows no UK VAT on the car. The car can come from any UK dealer; we are not limited to our own stock.

A £1,000 deposit secures the car, as on every car we source or buy for you. It is part of the price, not an extra fee.

The saving is only available if the car is bought correctly in the first place, which is why the order of events matters: talk to us before you pay a dealer anything, and we buy the car.

Buyers in the EU pay import VAT, and any customs duty that applies, in their own country when the car arrives.