Robert McGee

I am a director of a small limited company. We lease a car for me through the business, and at the end of the year the total of the monthly payments is subtracted from my annual bonus (or I would owe the business money if my bonus wasn't sufficient). The monthly lease payments include VAT, and my question is on whether the VAT can be claimed back? There is a general rule that 50% of the VAT on car lease payments can be reclaimed (together with 100% of the VAT on any maintenance payments). HOWEVER - our business is partially exempt from VAT - in fact 99% of our revenue stream is VAT exempt, so we only charge it on around 1% of our turnover. Does this effect the amount of VAT we can reclaim on car lease payments? Or can we still claim back the blanket 50%? The answer impacts what ends up being subtracted from my bonus, and I have found different interpretations on the internet. Help please!