Motor trade

Yes. R&D Tax Credits are one of the most valuable reliefs available to pharmaceutical companies. If your business is developing new drugs, formulations, processes, or technologies, you may be able to claim a significant tax reduction or cash credit from HMRC. The rules changed in April 2024 with the merger of the SME and RDEC schemes, so it’s important to take specialist advice.

Under the second-hand margin scheme, VAT is only charged on the profit margin (the difference between the buying and selling price) rather than the full selling price of a used vehicle. This avoids double taxation on second-hand cars. The scheme can only be used for vehicles purchased without VAT — for example, from a private individual. Full records of purchase and sale prices must be kept for each vehicle.

Yes, if a demonstrator vehicle is made available for private use by a director or employee, it is treated as a company car benefit and is subject to benefit-in-kind (BIK) tax. The taxable value depends on the car’s list price and CO2 emissions. However, HMRC allows a reduction where private use is genuinely restricted and the vehicle is primarily used for business demonstration purposes.

Motor trade businesses face several specific tax issues including VAT on vehicle sales (including the second-hand margin scheme), benefit-in-kind tax on demonstrator vehicles used privately, capital allowances on workshop equipment, and payroll taxes for mechanics and sales staff. Accurate stock records for vehicles are also essential for both VAT and Corporation Tax purposes.