Tax-Free UK Car Exports

Yes, if the car is bought the right way. A VAT-registered dealer 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 not registered for VAT. We do not charge VAT on our own fees, issue VAT invoices or reclaim VAT, so we cannot refund VAT on a car. The saving only exists if the dealer sells the car to you without VAT in the first place.

If a dealer charges you VAT on a sale it has not treated as an export, 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. A dealer can zero-rate the sale of a new car for export to a buyer who lives outside the UK, or to a business with no place of business here. The car must leave the UK within three months and must not be used here first, apart from the trip to the port, and the dealer must hold proof of export. If you live in the UK, the dealer can only zero-rate the sale if it arranges the export itself, or under the Personal Export Scheme below. Not every dealer will sell for export, so we find one that does.

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 a dealer selling one for export can take the full VAT 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 VAT-registered businesses can operate the scheme, so you buy from a dealer that runs it and complete form VAT 410 with them. An overseas visitor must export the car within 12 months of delivery, and a UK 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 are not VAT registered, so no VAT refund passes through us.

We find the car, confirm with the dealer that it will sell it free of VAT for export, and handle the collection, the UK export declaration and the shipping. The dealer invoices the car to you, the overseas buyer, without VAT, and we send the dealer the proof of export it has to keep. This is the one case where we do not buy the car ourselves. We normally buy a car and sell it on to you, but HMRC lets only the sale to the overseas buyer be zero-rated (VAT Notice 703, paragraph 4.1), and we are not VAT registered, so a car we bought first would carry VAT that nobody could take off. The car can come from any UK dealer willing to sell for export; we are not limited to our own stock.

You still pay us a £1,000 deposit to secure the deal, as on every car we source or buy for you, and it counts towards our charges. Some dealers also take a deposit equal to the VAT and refund it once they hold proof that the car has left the UK. That refund comes from the dealer, not from us.

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, then buy.

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