Recording invoices for the lease hire of a car

Summary

If a business leases a car for business use then HMRC rules dictate that normally only 50% of the VAT on the hire charge is recoverable. This article explains how to record the lease, maintenance and VAT charges in Sage Accounts.

Resolution

 Help us drive improvements. If you find this article useful, you can let us know now >

In this example the company has received the latest invoice for the lease hire of a car. The invoice shows charges of £/€1,000 plus VAT for the hire and £/€100 plus VAT for repair and maintenance costs. Only 50% of the lease hire VAT is recoverable, whilst all of the VAT for repair and maintenance is recoverable.

We've used Nominal Code 5000 for the purchase. This code is normally reserved for the purchase of goods. If you'd prefer, you can set up your own nominal code for the purchase.

The invoice is recorded as a batch invoice as follows:

TIP: To be able to amend the VAT value manually, you must select the Item VAT Amendable check-box in Settings, Company Preferences, VAT.

  1. On the navigation bar click Suppliers then click Batch invoice.
  2. Enter the invoice details as follows: 

    Nominal code Details Net Tax code VAT
    5000 Lease Hire Charge 1000.00 T1 100.00
    5000 Non-recoverable VAT 50% 100.00 T9 0.00
    7301 Repair and maintenance 100.00 T1 20.00
  3. Click Save then click Close.

For further information about motoring expenses and VAT, please refer to Public Notice 700/64 - Motoring Expenses, available from HMRC's website.

Solution Properties

Solution ID
200427112235345
Last Modified Date
Wed Mar 23 14:24:35 UTC 2022
Attributes
Product Details
Modules: Customers
Modules: Suppliers
Modules: Contact Management
Views
0