Disallowable / Allowable VAT

Disallowable / Allowable VAT

If a vehicle is financed on a Contract Hire or Finance Lease agreement and there is an element of personal use, the company can only claim back half the Vat (currently 8.75%) on the finance rental payment. The portion of Vat you can't claim back is called the disallowable Vat. All the Vat can be claimed back on the maintenance element spent on the vehicle.