Private use and self-supply of goods and services for VAT
How to account for VAT if your business allows goods and services to be used for temporary or permanent private use.
Using goods privately
Businesses often supply their own goods and services for private use. You may have to account for VAT on them if you바카라 사이트檙e VAT-registered and your business:
- buys and sells goods, and you take something from stock for your own private use
- uses equipment like tools and machinery and you lend something to an employee
If goods belonging to your business are used privately then you바카라 사이트檙e making a VAT taxable supply and you바카라 사이트檒l have to account for VAT at the appropriate rate. The way you account for the VAT depends on:
- whether you바카라 사이트檝e given the goods away permanently or just lent them
- whether or not you received a 바카라 사이트榗辞苍蝉颈诲别谤补迟颈辞苍바카라 사이트�
Some things, like motor fuel, have their own special rules for dealing with the VAT when they바카라 사이트檙e used privately.
Goods supplied for permanent private use
You바카라 사이트檒l have to account for VAT on goods taken out of your business permanently for private use. These goods might include:
- items from stock that you would normally sell to customers
- goods that your business makes or produces
- materials that your business uses to make things
- business supplies, like office supplies and protective clothing that you keep in your stores
- business assets, like computers, tools and machinery that your business uses
Private use includes use by you, or someone else you give the goods to. The way you should account for the VAT depends on whether or not you receive a consideration in return for the goods.
Goods supplied for temporary private use
If you make items owned by your business available for temporary private use, either by using them personally or by lending them to someone else, then you바카라 사이트檙e making a VAT taxable supply of services.
If you let someone use a business asset and receive nothing in return then VAT is due on the cost to your business of lending it. This will be the same if you use the item yourself.
To work out the cost of the supply you바카라 사이트檒l need to:
- take the amount that the item reduces in value during the year (depreciation)
- work out how much of the year the item is used privately
- apply that figure to the yearly depreciation figure
Motor fuel you use privately
You and your employees might use either your own vehicles or those owned by the business for a mix of business and private motoring. If your business pays for the fuel then you can usually reclaim all of the VAT you pay on it as long as you use the appropriate 바카라 사이트榝uel scale charge바카라 사이트� to account for output tax on the fuel used privately. Or, you could either reclaim just the business proportion of the VAT or not reclaim any VAT.
You may also be able to reclaim all of the VAT on repairs, maintenance and certain other motoring costs your business pays for as long as the vehicle is at least partly used for business purposes.
Services you use privately
You might sometimes purchase services for your business but then put them to private or non-business use. This includes making private use of the services yourself or making the services available to others for their own private use. If you do this, your business may be making a VAT taxable supply of services on which you need to account for VAT.
VAT is due on the cost to your business of making the services available for private use. You can use various methods to work out the cost, as long as you come up with a fair and reasonable figure. For example, you can use a similar method to the one that바카라 사이트檚 used for 바카라 사이트楪oods supplied for temporary private use바카라 사이트� and:
- think of the service as a 바카라 사이트榖usiness asset바카라 사이트� and work out how much it바카라 사이트檚 worth
- work out how much the asset would reduce in value during the year (depreciation)
- work out how much of the year the asset is used privately
- apply that figure to the yearly depreciation figure
This is only a suggested method, and if you want to use a different one and you바카라 사이트檇 like to talk it through, you can contact the HMRC VAT Helpline.
Continuous services you use privately
If your business buys continuous services that are used privately, such as your telephone, you can only reclaim the VAT on the business use. For example, if your business use comes to 60% of total usage then you would only be able to reclaim VAT on 60% of the cost. Dividing the cost of something between business and private use is called 바카라 사이트榓pportionment바카라 사이트�.
Goods you put to use in your own business
If your business produces goods, or if it buys and sells them, you might use these in the business instead of selling them on.
There바카라 사이트檚 not usually any VAT due on goods that you use like this because you haven바카라 사이트檛 made a VAT taxable supply. But there are a few exceptions, including cars that motor traders put to use in their own business. These exceptions are known as 바카라 사이트榯axable self-supplies바카라 사이트�. You must make a note in your VAT records of goods you use within the business.
Self-supply of cars
If you바카라 사이트檙e a motor manufacturer or dealer and you take a car from your stock to use in your own business, then this is a taxable self-supply. You바카라 사이트檒l need to account for VAT on the supply.
Other taxable self-supplies
There are a few other situations when goods that you put to use in your own business are treated as VAT taxable self-supplies. These are:
- certain non-domestic buildings that you use your own labour to construct or extend
- cars that you claimed input tax for because they were to be used as a taxi, self-drive hire car or driving school car, but then put to some other use
Things you buy for the business but then sell to someone
If you buy something for use in the business but later sell it to a customer then VAT is due on the amount you sell it for. This includes selling it to one of your employees.
Considerations
A consideration is a payment, but it doesn바카라 사이트檛 have to be money. It could be many other things, such as an agreement to do something in return for the goods, or in return for the use of the goods.
If you바카라 사이트檝e:
- given the goods away permanently then you바카라 사이트檝e made a supply of goods for VAT purposes
- just lent the goods temporarily then you바카라 사이트檝e made a supply of services
- given away an asset as a business gift, there바카라 사이트檚 no VAT due if the total cost of all gifts made to the same person in the same year is no more than 拢50
If you receive a consideration
A consideration is something given to you in return for something you바카라 사이트檝e supplied. The consideration could be in money, goods, services or any combination of the three.
If the consideration you get is money, then the amount is VAT-inclusive and you need to calculate the VAT due at the correct rate for the supplies you바카라 사이트檝e made. If what you바카라 사이트檝e supplied is zero-rated, there바카라 사이트檚 no VAT due.
If the consideration you get isn바카라 사이트檛 money, or is part money and part something else, such as goods and services, you need to calculate the value of the part that isn바카라 사이트檛 money. The total amount (the non-monetary part plus any money) is VAT-inclusive and you need to calculate the VAT due according to the correct rate for the supplies you바카라 사이트檝e made.
If you make supplies to a business that you바카라 사이트檙e associated with, and you supply goods, services or anything else to them at prices below the open market value, you바카라 사이트檒l need to contact the VAT Helpline to discuss how to account for the VAT correctly.
If you don바카라 사이트檛 receive any consideration
If you give something away and receive nothing in return for it then VAT is due on the value of what you바카라 사이트檝e supplied. This is the money that would be payable to purchase the same goods - including age and condition - at the time of your supply.
If you can바카라 사이트檛 find out that value, then it바카라 사이트檒l be the money that would be payable to purchase similar goods - including age and condition - at the time of your supply. If you can바카라 사이트檛 work that out, then it will be the cost of producing the goods if they were made at that time.
If the goods are standard-rated the VAT due will be 20% of the value. Reduced-rated goods will be 5% of the value. You do the same calculation if you take something from the business for yourself and make no payment for it.
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