Golf buggy finance: funding a new or used buggy fleet

No. HMRC's notice on sport lists buggy hire as standard rated, even for a club that is an eligible body and whose green fees and playing membership subscriptions are exempt. Trolley and locker hire, by contrast, can be exempt when an eligible body supplies them. To be an eligible body a club must be non profit making and not subject to commercial influence, so a proprietary course's sporting supplies are generally standard rated in any case. For a members' club, buggy hire is therefore one of the income streams that carries VAT, which shapes both the hire price and how the fleet is funded.

Can a golf club reclaim VAT on new buggies?

Often, where the club is VAT registered and the buggies are used to make taxable hire supplies. VAT on buggies bought or leased for hire is normally attributable to that standard rated income, although a club that also makes exempt supplies works within its partial exemption method, so the accountant should confirm the recovery. The finance type changes the timing. On hire purchase, VAT on the full price is usually charged at the start and collected with the deposit, while a lease adds VAT to each rental. A club that pays the VAT at the outset and reclaims it on its next return may need that short gap covered.

• Buggy hire. Standard rated.
• Trolley and locker hire. Exempt when an eligible body supplies it.
• Hire purchase. VAT on the full price at the start.
• Leasing. VAT added to each rental.

HMRC sets out the liabilities in VAT Notice 701/45 on sport. Our pages on VAT loans and hire purchase versus leasing explain the cash flow side. Instant Quotes gives indicative terms from panel lenders for a buggy fleet.

Not by law on private land in Great Britain. The Motor Vehicles (Compulsory Insurance) Act 2022 ended the effect of the Vnuk ruling, which could have required motor insurance for vehicles used away from roads, and it applies in England, Wales and Scotland from 28 June 2022. Compulsory cover under the Road Traffic Act 1988 still applies wherever a vehicle is used on a road or other public place. A buggy that stays on a private course does not need a motor policy, although a path open to the public can blur that line, so take the insurer's view. The club still needs public liability cover for players and visitors and cover for theft and damage, and a finance agreement will normally expect the fleet insured for its full value.

Can a golf buggy be driven across a public road?

Only once the insurance and paperwork are in place. Using a motor vehicle on a road brings in compulsory insurance under the Road Traffic Act 1988, and the DVLA rules on registration and vehicle tax can apply too. HMRC's fuel notice lets machines cross a road between two parts of a golf course by the shortest practicable route, but leaves out unlicensed vehicles and those declared SORN wherever the road is public. A club whose layout sends buggies over a lane should settle the position with its insurer before choosing a fleet, because the answer can decide which models are suitable and what the agreement has to cover.

• Private course. No compulsory motor insurance in Great Britain since June 2022.
• Roads and public places. Road Traffic Act cover is required.
• Public liability. Needed for players and visitors.
• Finance agreements. Expect the fleet insured for its full value.

The change is made by the Motor Vehicles (Compulsory Insurance) Act 2022. Our guides to golf club finance and used equipment finance cover the wider fleet. Use Instant Quotes to compare indicative terms.

Buggy hire can be a useful source of income for a golf club, and many golfers expect buggies to be available. A fleet is a large outlay, though, and buggies wear out and need replacing on a cycle. Financing the fleet spreads the cost over the years the buggies earn their keep, keeps reserves free for the course and clubhouse, and lets a club replace buggies in batches rather than all at once.

Buggy hire income is strongest in the summer. Some asset finance lenders can set payments around a seasonal pattern, with lower payments in the winter months, which can suit a club whose income dips sharply. Ask about this before you sign, not after. If you are trading in an old fleet, the part-exchange value can act as a deposit, reducing the amount to finance.

Electric buggies are quieter and cheaper to run, but batteries have a limited life and replacement packs are a significant cost; lithium batteries usually cost more up front than lead-acid but last longer and charge faster. Petrol buggies cope with long or hilly courses without recharging. The choice affects running costs, resale value and how lenders see the fleet at the end of the term, so compare the whole cost over the finance period rather than the purchase price alone.

Used and refurbished buggies can cut the cost of a fleet, and many lenders will fund them if they come from a recognised manufacturer, have a known service history and are bought from an established dealer. Batteries on used electric buggies may need replacing sooner. Our page on used equipment finance explains how lenders approach second-hand assets.

Finance payments carry on through a wet winter when buggies sit in the store, so check the payments against a cautious year. If the buggies are worth less than the balance at the end of a lease, or if you need to end an agreement early, there may be a shortfall to pay. Make sure the term fits how long you expect to keep the fleet, and read the end-of-term terms on any lease before signing.