Confusion reigns over VAT rise on new cars
Research from Auto eBid has uncovered confusion and misleading advice over the impact of the New Year VAT rise on new car purchases. The revolutionary car buying website has also clarified the policies of key UK dealers, for the first time.
“Some of our customers have been told that if they order now, they’ll save on VAT even if they don’t pay before year end, but that’s just not true,” explains Auto eBid CEO Amin Saleem. “Our survey of dealers is categorical: anyone buying their car in 2009 pays 15%; anyone who doesn’t, pays 17.5%.”
Incorrect advice uncovered suggests 15% applies:
If a dealer raises a full VAT invoice before 31December 2009, at the point when the car is ordered
If you only pay a portion of the price in 2009, but not the full balance
If a car is registered within six months of order, even if this is in 2010
In fact, the lower VAT rate only applies to payments made up to 31 December 2009, regardless of the invoice date. Furthermore, a dealer can only invoice a customer in full once their car has been given a chassis identification number by its manufacturer – ie: has been physically built – and not necessarily at the point of ordering. Auto eBid clarified its advice with its body of over 1,000 main and franchised dealers.
The following are the actual rules applying to customers wanting to benefit from the lower VAT rate:
The car must be invoiced and paid for in full before 31 December 2009
If the customer requests a 2010 delivery, this should fall before the end of March 2010
Finance agreements that extend beyond 31 December 2009 cannot be made at 15% VAT
If the car costs over £100,000, it is not applicable for 15% VAT
“This is potentially very misleading,” says Saleem. “Even on a mid-range Ford Focus, you could be out of pocket by around £500, if you don’t pay for your car this year.”
“The confusion is there because the rules are very complicated. However, all dealers we’ve spoken to are erring on the side of caution,” he concluded.
Auto eBid’s no-nonsense approach to car buying extends to its unique ‘reverse auction’ website, which invites car dealers to bid against each other for each sale, creating the cheapest route to a new car available today.
This simple process puts the consumer back in control, saves awkward haggling in dealer showrooms and delivers greater savings on new cars than any other car-buying option. It’s open to any customer, looking for any UK car model.