Lease Car - Company charging VED/Road Tax

Betterthanlife

And the VED premium is payable from year 2 till year 6, so the first year VED is at the standard rate (£180 in 2023?)

sheramber

Looks like the leasing company were not charged the luxury car tax in June 24 or didn’t notice.

They are now correctly charging it going forward. 

Natcole

sheramber said:

Looks like the leasing company were not charged the luxury car tax in June 24 or didn’t notice.

They are now correctly charging it going forward. 

My question is whether this is my issue or not.
If they had a list price of more than £40,000 and were aware that the Luxary Vehicle Tax would be applicable and for whatever reason they were not charged, surely this should not be passed on to me?
When I check the before mentioned sites regarding the additional rate, it says applicable until 29th May 2029.
Im not sure if this means that the May 29th would be the last date that it will be paid, or if this is the last applicable date for the additional rate.
If it's the latter, then this would imply that the first additional rate was paid last year?

Natcole

sheramber said:

Looks like the leasing company were not charged the luxury car tax in June 24 or didn’t notice.

They are now correctly charging it going forward. 

Just to clarify, what I mean is that if they expected this charge to take place and it didn't, to then be charged this correctly is not something that should be unforeseen. I.e. it should be based on the list price and their monthly fees should take this into account - it's not a surprise or "sudden" increase by DVLA. It should have been reasonably been expected by them 

Natcole

Betterthanlife said:

And the VED premium is payable from year 2 till year 6, so the first year VED is at the standard rate (£180 in 2023?)

So my thoughts are that they should have expected the VED to be £180 in 2023 and then should have expected the VED to be £180 PLUS the Additional Luxury Car Tax supplement for the 2 years following that.
Obviously if the VED increased from £180 (which in this case it has - to £195) and the Additional supplement increases (again which it has from £400 to £425), we should only be liable for the difference, which would be £15+vat and £25+vat.
They cannot say that the additional Luxary car tax supplement is a unforeseen increase in my opinion 

Natcole

Just an update on this - the leasing company have come back and said that the list price for the Golf R was £38,500.
I can't believe this is accurate. Have escalated this to a complaint and requested they provide proof of this, and why if it is what they were told, they didn't question it when every other Golf R seems to be far in excess of the £40k mark

HarrandAnd

Natcole said:

Just an update on this - the leasing company have come back and said that the list price for the Golf R was £38,500.
I can't believe this is accurate. Have escalated this to a complaint and requested they provide proof of this, and why if it is what they were told, they didn't question it when every other Golf R seems to be far in excess of the £40k mark

Did you have any luck? We have the exact same issue with Leaseplan (avoid if possible!!!), only in our case we actually have an email from them before the contract was signed with a list price for the car of over £40k. So they clearly knew the additional road tax would be payable, but six months later we get a bill for £425 (plus VAT because apparently Leaseplan are providing us with a ‘service’!! 😂), and then again this year for another £425 plus VAT. Their line was this was an unforeseen increase so they can pass on the costs. We’ve been trying to challenge it for over a year now and get nothing back from them. If there’s anyone reading this with a similar experience or enough knowledge of contract law to advise, please help! From my layman’s perspective I don’t see how they can say this fits into the unforeseen circumstances clause in the contract…

facade

HarrandAnd said:

<snip>

 six months later we get a bill for £425 (plus VAT because apparently Leaseplan are providing us with a ‘service’!! 😂)

<snip>

It is actually because they are the registered keeper, and it is their responsibility to pay the £425. So when they pass the cost to you, it is a recharge and VAT is chargeable. If the car was registered in your name, you wouldn't have to pay the VAT, even if they paid it on your behalf and billed you as it would be a disbursement..

https://www.gov.uk/guidance/vat-costs-or-disbursements-passed-to-customers

Any admin charge they added for paying it would be a service and therefore attract VAT.

I can't help with the "unforeseen charges clause" though, it is there to cover the annual increase in VED and any back pedalling on the rate- like when they raised the VED on EVs from zero to £195 from April 2025 and backdated it to cover all the EVs registered from 2017.

Cueba11uk

Greetings all,

So I find myself here to discuss options about this subject as I find myself in the same position having an unexpected VED charge levied upon my vehicle after leasing it for 2 years now.  In my case I am subject to £195 VED.
I am not actually complaining about the VED charge itself, as it is what is but about the lease company adding a further VAT charge to the VED.  I find this unethical in many ways
I contacted my lease company to query this and the representative told me it was a 'service charge' they were entitled to add because they are applying for the VED from HMRC.  But in my case the invoice they sent clearly states it's 20% VAT on the VED and not a service charge.  For me a service charge is a fixed fee for a service but by levying it in this manner a vehicle subject to £1000+ VED will be charged significantly more for the exact same service to apply for VED as a vehicle that only attracts a £35 VED.  This is just profiteering. 

Further to that, according to HMRC's own advice in the link from the above post, this is classed as a disbursement and therefore not suitable to attract VAT. I would argue that for the purposes of applying for VED it meets all the criteria to class it as a disbursement. If they argue that it's a cost service then it should be itemised as a separate charge which then has a VAT component attached only to that specific item
I think it's high time these lease companies are held to account for this practise of adding VAT to the VED charge because I can only imagine the 10's of thousands of people paying anything from £5 to over £400 extra in a trumped up VAT charge each year.
Any advice on how to proceed with this on a wider scale would be appreciated 

DrEskimo

Cueba11uk said:

Greetings all,

So I find myself here to discuss options about this subject as I find myself in the same position having an unexpected VED charge levied upon my vehicle after leasing it for 2 years now.  In my case I am subject to £195 VED.
I am not actually complaining about the VED charge itself, as it is what is but about the lease company adding a further VAT charge to the VED.  I find this unethical in many ways
I contacted my lease company to query this and the representative told me it was a 'service charge' they were entitled to add because they are applying for the VED from HMRC.  But in my case the invoice they sent clearly states it's 20% VAT on the VED and not a service charge.  For me a service charge is a fixed fee for a service but by levying it in this manner a vehicle subject to £1000+ VED will be charged significantly more for the exact same service to apply for VED as a vehicle that only attracts a £35 VED.  This is just profiteering. 

Further to that, according to HMRC's own advice in the link from the above post, this is classed as a disbursement and therefore not suitable to attract VAT. I would argue that for the purposes of applying for VED it meets all the criteria to class it as a disbursement. If they argue that it's a cost service then it should be itemised as a separate charge which then has a VAT component attached only to that specific item
I think it's high time these lease companies are held to account for this practise of adding VAT to the VED charge because I can only imagine the 10's of thousands of people paying anything from £5 to over £400 extra in a trumped up VAT charge each year.
Any advice on how to proceed with this on a wider scale would be appreciated 

Aren’t you opening the potential to be charged more here?

You currently are paying £195 for the VED and then VAT on that at £39 (the additional cost you object to). 

If you’re arguing that VAT should only be charged on the service then what’s stopping them going “OK, it cost £50 in admin to apply the new VED rate as a service, which I can now charge VAT on, so £60 please”. 

Of course they could charge anything they like for the service admin fee (seen some insurance policies charge up to £155 for changes to policies) but I can’t see a reality where it would be feasibly much less than £39?

The likelihood of an additional £1000 VED charge being added retrospectively wouldn’t be high to make the crusade worth it IMHO.