62. Reduction of tax deductible in relation to qualifying vehicles

Summary

This section provides for a claw-back of tax deducted in respect of a qualifying vehicle as defined in section 59(1). Such a claw-back arises in two circumstances. The first is where the vehicle is sold within 2 years of its purchase, acquisition or importation. The second is where the vehicle is used for less than 60% business purposes in a taxable period.

The section sets out two formulas for calculating the tax to be clawed back. Both formulae are based on a 6-month timeframe, with less tax clawed back as the period of time increases.

Details

(1)(a) The first circumstance under which the clawback operates is where the vehicle is sold within 2 years of its purchase, acquisition or importation.

(1)(b) Under the formula, the clawback is based on the length of time that the accountable person has the vehicle:

• less than 6 months, 100% clawback
• 6 months to 12 months, 75% clawback
• 12 months to 18 months, 50% clawback
• 18 months to 24 months, 25% clawback
• over 24 months, no clawback.

(2)(a) The second circumstance under which the clawback operates is where the vehicle is used for less than 60% business purposes in a taxable period.

(2)(b) The formula operates in the same way as outlined above.

Relevant Date: Finance Act 2020