Key VAT Considerations
🏢 Commercial Property Leases
Commercial lease payments are standard-rated at 10%. VAT is charged on each rental payment (not on the ROU asset value). Input VAT on rent recoverable if premises used for taxable activities.
🏠 Residential Property
Residential leases are zero-rated (0% VAT). First sale of residential property within 3 years of completion is also zero-rated. Subsequent sales are exempt from VAT.
🚗 Vehicle Leases
Operating leases on vehicles standard-rated. Input VAT on vehicle leases is blocked (non-deductible) unless the vehicle is used exclusively for business. Company car policy has VAT implications.
⚙️ Equipment Finance
Finance leases treated as a supply of goods for VAT. VAT due on the full value at inception. Operating leases — VAT on each periodic payment. Hire purchase — same as finance lease.