do used car dealers have to pass on VAT cut tomorrow ?

lots29

Hi, I have been looking at used cars all weekend. The VW dealer says, that as the VAT has already been paid on cars when they are registered VAT does not apply to used cars. The Citroen dealer says it will......Help ! I wanted to buy the VW today, BUT wonder if it is eligible to be cheaper tomorrow..... Charlotte

pandas66

I bought my 'new' car yesterday.

I said to Mr Dealer 'if I'd waited till Monday would my car be £60 cheaper?'

He said No, I can only apply Vat to the profit margin not the whole resale. Plus he can deduct any repair cost, so if he bought the car at £1000, spent £500 and was selling it at £2000 he could only apply VAT to the £500 profit.

lots29

Thanks Panda, so any profit for them does have VAT applied, I thought so. But, we will never really know what their "profit" margin is.....hmmm interesting.

jscalow

lots29 wrote: »

Hi, I have been looking at used cars all weekend. The VW dealer says, that as the VAT has already been paid on cars when they are registered VAT does not apply to used cars. The Citroen dealer says it will......Help ! I wanted to buy the VW today, BUT wonder if it is eligible to be cheaper tomorrow..... Charlotte

If you sell an item second hand in a shop, such as a bag in Oxfam you are charged VAT. The same applies to a car in a dealership. I t makes no difference if it is brand new or has 7 previous owners. The VAT is charged @ 17.5 % (or 15%) on the total price you pay. If the dealer is going to fob you off regarding this what else will he/she lie about- the worthines of the brakes, the quality of the service on the car, its history? Walk away.

lots29

Thanks JS, we did haggle yesterday for his bottom price and he reduced it by £240, and I have just worked out that is 2.5%. Honestly, I wish they would just be up front and say "that's the VAT saving" and not "I'll do you a favour here..." It is a "reputable" VW dealership but the Citroen is now looking more attractive !!

Bob63

jscalow wrote: »

If you sell an item second hand in a shop, such as a bag in Oxfam you are charged VAT. The same applies to a car in a dealership. I t makes no difference if it is brand new or has 7 previous owners. The VAT is charged @ 17.5 % (or 15%) on the total price you pay.

Wrong!

Used cars can be sold under the VAT margin scheme - http://www.hmrc.gov.uk/vat/account-margin.htm

dzug1

When you buy a car from a dealer you negotiate (as a private buyer) a total price.

It's the dealer's problem as to how much of that goes in VAT

As from tomorrow you may be able to drive a harder bargain but don't expect any change in displayed prices.

mikeouk

some dealers dont show any profit on their books until the end of a deal (does that make sense)
eg, dealer buys car for stock for £10000, he has it on the forecort for £12000, someone trades in their car and is given £5000, so the differance payed is £7000, the dealer will show on his books that he sold the original car for the £10000 he paid and the trade in stands on his books at £3000, he makes his profit when the trade in is sold. If he sells the trade in for £4000, hes made £1000 on the whole deal and he pays customs and excise the vat content of £1000, not vat on £1000
so,,,,no,,,the vat reduction will have no effect on the price of a used car

harveybobbles

dzug1 wrote: »

When you buy a car from a dealer you negotiate (as a private buyer) a total price.



As from tomorrow you may be able to drive a harder bargain but don't expect any change in displayed prices.

The screen price on all 50 of my cars will stay the same as they were 2 weeks ago, just cos the VAT is changing doesn't mean that the screen prices will be.

Unless you know what proffit the dealer is making, then it's all pointless. Cos we only pay VAT on our proffit.

big_gay_kirk

we were told at our place that we don't have to pass the vat cut on at all anyway.. its down to the discretion of individual businesses..... and the reduction comes out at 2.12 % not 2.5 % for various reasons...