On the 4th January 2011 the UK's standard rate of VAT will rise from 17.5% to 20%. While this will not have a major affect on the price of most used cars the rise will add several hundred pounds to all new cars. However you can avoid paying the extra 2.5% for a new car if you intend on buying it within the first 6 months of 2011.
Business can create a 'tax point' before Jan 4th 2011 but deliver the service / product after the date VAT is increased. All they need do is raise an invoice or accept a payment, so long as you are not paying for the car using a finance package – personal loans can make use of the tax point.
Disappointingly What Car has discovered that of the 30 Dealers it called posing as a customer only 3 where aware of the tax point system, the remainder simply told What Car that the car would have to be paid in full or registered before the 4th
What Car speculate that many dealers may be put off as they may have to pay the VAT due before accepting payment from the customer or simply may not know how the system works.
Regardless, if you do intend on buying a new car then you should attempt to make arrangements before the 4th
That was very helpful post and information you made here but I think now every think is fine and most of the cars are coming with some good scheme like in skoda fabia, yati etc.
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