tmcmatchVAT on car hire, leasing and EV charging: the 10-day rule and the 50% block
Cars are the one part of business travel where VAT recovery is deliberately restricted. Buying a car that anyone could use privately: no recovery. Leasing one: half the VAT is blocked. Hiring one for a business trip is the exception — for a specific trip of ten days or fewer, HMRC lets the whole of the VAT be recovered. Charging an electric car depends on where it is plugged in. This page puts fourteen common cases against VAT Notice 700/64 and HMRC’s own manual.
Key points
- Hire car, specific business trip, 10 days or fewer: recover all the VAT.
- Hire car replacing an off-the-road company car: 50% blocked from day one.
- Leases: 50% blocked, including optional services and early termination charges.
- Purchase: usually no recovery unless the car is genuinely not available for private use.
- EV charged at home by an employee: no recovery for the employer.
How much VAT can be reclaimed: fourteen cases
| Cost | VAT recoverable | Why |
|---|---|---|
| Hire car for a specific business trip, 3 days | All of it | Within the 10-day rule; no 50% block |
| Same hire, used in the evening and at the weekend | All of it | Evening and weekend use ignored for a specific business trip of 10 days or fewer |
| Hire car for a business trip, 14 days | Depends | Over 10 days: the normal wholly-business test applies |
| Hire car replacing an off-the-road company car | 50% | Block applies from the first day of hire |
| Two back-to-back 8-day hires | Each tested separately | No averaging across hires |
| Leased company car available for private use | 50% | The 50% block covers private use |
| Optional services on the lease invoice | 50% | Unless supplied and identified separately |
| Maintenance supplied separately from the lease | All of it (normal rules) | Separate supply |
| Early termination charge on a lease | 50% | Treated as further rental |
| Buying a car available for private use | None | General rule: no recovery on purchase |
| Pool car kept at the business premises | All of it | If not allocated to anyone and not kept at a home |
| Repairs to a car used for business | All of it | If the business paid for the work |
| EV charged at a public charger by an employee | Business proportion | Supply is made to the employer |
| EV charged at the employee’s home | None | Supply is made to the employee |
Hire cars: the 10-day rule
This is the rule that matters for business travel, and it comes from two HMRC sources that say the same thing. The notice:
This applies if the car is hired just to replace an off-the-road, ordinary company car. The 50% block applies from the first day of hire. We accept that in other cases, (for example if you do not have a company car), if you hire a car for no more than 10 days to use specifically for your business, the 50% block will not apply.Read it on legislation.gov.uk
And HMRC’s internal manual, which explains where the rule comes from:
A 10 day concession has been agreed with the British Vehicle Rental and Leasing Association (BVRLA). Under this the 50% input tax restriction is not applied to a business hire of 10 days or fewer.Read it on legislation.gov.uk
Three details from the manual shape how a travel policy should work:
- Each hire stands alone: “Each hiring must be treated separately. Businesses are not allowed to adopt an aggregate method such as the average rental period per quarter.”
- Evenings and weekends do not spoil it: “use in the evenings or at the weekend during a hire of 0 to 10 days should be ignored if the car was hired to make a specific business trip.”
- Longer hires: “For hiring over 10 days the normal test for wholly business purpose will apply.”
So the hire car booked for a three-day client visit is a full recovery; the same car booked because the pool car is in the garage is not. The booking reason is worth recording at the time.
Leased cars: the 50% block
If you lease a ‘qualifying car’ (read section 2.3 ‘Qualifying car’) for business purposes, you cannot normally recover 50% of the VAT charged. The 50% block is to cover the private use of the car. You can reclaim the remaining 50% of the VAT charged, subject to the normal rules.Read it on legislation.gov.uk
The block reaches further than the monthly rental. It covers “optional services — unless they’re supplied and identified separately from the leasing supply on the tax invoice”, and early termination: “The 50% block applies because the termination charge is additional charge for the rental of the car.” Maintenance supplied as a genuinely separate service is outside it.
Buying a car
“As a general rule, you cannot recover the VAT on the purchase.” The exception that most businesses might meet is exclusive business use: “A car is used exclusively for business purposes if you use it only for business journeys and it is not available for private use.” The bar is high: “A car is available for private use when there’s nothing preventing you or your employee from using the car for private use.”
Pool cars are the practical route. HMRC accepts recovery where the car is “normally kept at the principal place of business not allocated to an individual not kept at an employee’s home”.
Once the car is running, repairs are ordinary: “If you use a vehicle for business purposes, you can reclaim the VAT you were charged on repairs and maintenance as input tax as long as the business paid for the work.”
Electric cars: where the charging happens
- At work or elsewhere, paid by the business: “VAT incurred by businesses when charging electric vehicles can be recovered on the business use of those vehicles.”
- At a public charger, by an employee: “If an employee charges an electric vehicle (whether this is a company vehicle or not) at a public charging point, the supply of electricity is made to the company or employer.”
- At the employee’s home: “The employer is not entitled to recover the VAT on the cost of charging the electric vehicle.”
Fuel for employees’ own cars, and the advisory electricity rates, are on VAT on mileage claims; the rest of a trip — trains, flights, taxis, hotels — is on VAT on business travel.
We are paid a fixed fee per enquiry, agreed in advance, identical whichever supplier receives it. Car hire is here because it is booked through the same travel channel as flights and hotels, and the reason for each booking decides the VAT.
Want car hire booked with the reason recorded?
Describe the requirement once. It goes to no more than three suppliers, once each.
For the travel and expenses policy
- Record the reason for every hire: specific business trip, or replacement for a company car.
- Keep hires for trips to 10 days or fewer where the trip allows; book separate hires rather than one long one only where they are genuinely separate trips.
- Ask leasing companies to invoice maintenance separately.
- For EVs, say whether home charging is reimbursed and on what evidence — the employer cannot reclaim the VAT on it.
This page quotes VAT Notice 700/64 and HMRC’s VAT Input Tax Manual as read on 2026-09-29; partial exemption and non-business activities can restrict any reclaim. It is not tax advice.
Common questions
Can you claim VAT on car hire?
Usually all of it for a short hire for a business trip. HMRC: “A 10 day concession has been agreed with the British Vehicle Rental and Leasing Association (BVRLA). Under this the 50% input tax restriction is not applied to a business hire of 10 days or fewer.” The exception is a hire that replaces an off-the-road company car, where the 50% block applies from day one.
Can you claim VAT on a car lease?
Normally half. VAT Notice 700/64: “If you lease a ‘qualifying car’ (read section 2.3 ‘Qualifying car’) for business purposes, you cannot normally recover 50% of the VAT charged.” “The 50% block is to cover the private use of the car. You can reclaim the remaining 50% of the VAT charged, subject to the normal rules.”
Can you claim VAT on buying a company car?
Generally no: “As a general rule, you cannot recover the VAT on the purchase.” The main exceptions are cars used exclusively for business and not available for private use, and cars bought primarily for taxi, self-drive hire or driving instruction.
What counts as private use availability?
HMRC: “A car is available for private use when there’s nothing preventing you or your employee from using the car for private use.” Buying a car for the business is not enough; it must not be made available to anyone for private use.
Can you claim VAT on EV charging?
At work or at a public charger, yes for the business use. When an employee charges at home: “The employer is not entitled to recover the VAT on the cost of charging the electric vehicle.”
Does the 10-day rule apply if the hire is 11 days?
No. “For hiring over 10 days the normal test for wholly business purpose will apply.”
Sources cited on this page
Every figure above was read from the source it is attributed to on 20 September 2026. How we check this.
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