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Beat VAT increase with a used car from

29th December 2009 Print

Car buyers can beat the VAT increase with a used car from, as January's new tax rate pushes up the price of new cars., UK online used car retailer, has pledged to absorb the cost of the VAT increase. However, the move from 15% to a 17.5% VAT rate will put £250 on the price of a new car with a £10,000 pre-tax price, so's stock will be even better value compared with a new model.

"The VAT increase will increase the price gap between new and used cars," said's Founder, Fredrik Skantze. "With the scrappage scheme likely to run out of money in February, many buyers will once again find a new car is just too expensive. A quality used model is much better value."

The 17.5% VAT rate and the end of the scrappage scheme won't be the end of the bad news for new car buyers in 2010, Skantze predicts: "We've already seen a number of car manufacturers raise prices in 2009. Ford's prices have gone up no less than four times in the past 12 months. While the pound remains weak against the euro, increases by other manufacturers can't be ruled out.

"Experts are also predicting the cost of steel will increase in 2010, which will add to the cost of manufacture. Don't be surprised if the new car buyer has to foot the bill," Skantze concluded.

While VAT applies to the invoice price of every new car, the tax position is more complicated in the used market. On many used cars, the selling dealer only pays VAT on their profit margin. Even VAT Qualifying cars, which do attract VAT, are valued no differently by trade price guides to any other used car. In effect, this minimises the theoretical impact the VAT increase has on used car prices.'s VAT price pledge goes further, however, and means the 17.5% VAT rate won't add a penny to the price its customers pay.

For more information on the VAT increase visit and for more information on go to