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05 May, 2012

Why do I get charged tax on my road tax? Why don't you let me buy my own road tax and save myself £42?

Hi Paul and thanks for the question. You're not the first to ask this question and it probably does seem a bit ridiculous. This situation only occurs on a finance lease agreement as with contract hire road fund licenec for the term is included in the rate you pay each month (all of which is vatable) But back to your situation There are reasons that it has to be done like this. Most if not all leasing companies have to have the vehicles they lease registered to them in order to obtain the large fleet discounts that are applied to their leasing rates . If a vehicle road fund licence (or road tax) is not renewed each year then the registered owner and not the rgistered driver is responsible and therefore liable for any fines that are issued by the DVLA if it is not renewed, so in this case the leasing company. Now if you take our largest Leasing company Network (Leaseplan) then they have in the region of 60,000 vehilces currently on lease to '000's of customers. The only way they can make sure that the vehicles they have are "legal" as far as road fund licence is concerned. Is to renew it themselves and recharge the customer. Unfortunately by doing this they then have to recharge the customer and under H.M.R.C rules this is then classed as a service and VAT has to apply. Obviously if you are VAT registered then you can claim this back through your quarterly returns. Probably not the answer you wanted but hopefully it explains things. Andy

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About Andy

Andy has worked in the motor trade and more specifically been involved in supplying finance for vehicles, coming up to 20 years. He started his own business www.autorama.co.uk in 2004 selling used vehicles before expanding the company via its comercial vehcle leasing business in 2006. Back then the leasing business was pretty much just him, a laptop and a portakabin. Now just six years later Autorama through it's online brands vanarama.co.uk and pickuptrucksdirect.co.uk is recognised as the largest independant commercial vehicle leasing broker in the UK.

The last six years have seen continued growth and resulted in the company now employing 32 staff. Being able to offer some of the most competative rates in the country as well as industry leading levels of customer service have played a big part in our growth. However it is our ability and moreover our expert knowledge in this sector that has allowed us to best advise and therefor better serve our customers.

Every customers needs are different and there are so many options available that it's easy to see why people get confused by either inaccurate or simply poor advice. We are here to help and advise you so whatever your query, no matter how big or small your business or how complicated your situation seems. let us answer your van leasing questions.

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