BIK and PCP

Eldi_Dos

I have read car adverts for many years now and have noticed that when PCP deals are offered that a common sales tactic is for a dealer or manufacturer to offer a 'deposit contribution' given by the dealer or manufacturer, I believe this is done to make the PCP APR % look better, all very good as a sales tactic, but I would argue that the fiqures quoted for the RRP (for want of a better description) are artificially inflated to make the APR look good.

If the initial price used for cars is artificial I would say this works against the many people who pay BIK tax as this would be the price used to work out BIK rather than the market price.

I would appreciate others thoughts on this.

MyRealNameToo

Eldi_Dos said:

I have read car adverts for many years now and have noticed that when PCP deals are offered that a common sales tactic is for a dealer or manufacturer to offer a 'deposit contribution' given by the dealer or manufacturer, I believe this is done to make the PCP APR % look better, all very good as a sales tactic, but I would argue that the fiqures quoted for the RRP (for want of a better description) are artificially inflated to make the APR look good.

If the initial price used for cars is artificial I would say this works against the many people who pay BIK tax as this would be the price used to work out BIK rather than the market price.

I would appreciate others thoughts on this.

The deposit contribution would make the APR look higher assuming they want/need to make £X profit from the finance which is normally a different company to the seller of the car. The deposit lowers the size of the loan which means to achieve the same £X they need to inflate the interest to achieve it -v- what they would have needed to sell the car on finance at full price. 

Ultimately people like free stuff and dont stop to think that the interest payments will outweigh the discount but then most people dont have the funds to buy the car cash either. 

This is nothing new though, cars have always sold under RRP irrespective of if it was cash or finance or something else. Similarly the government has a target to hit on tax revenue so if the price of cars universally dropped you'd probably see the BIK percentages increase to balance the books. 

singhini

Eldi_Dos said:

I have read car adverts for many years now and have noticed that when PCP deals are offered that a common sales tactic is for a dealer or manufacturer to offer a 'deposit contribution' given by the dealer or manufacturer, I believe this is done to make the PCP APR % look better, all very good as a sales tactic, but I would argue that the fiqures quoted for the RRP (for want of a better description) are artificially inflated to make the APR look good.

If the initial price used for cars is artificial I would say this works against the many people who pay BIK tax as this would be the price used to work out BIK rather than the market price.

I would appreciate others thoughts on this.

That’s why BIK exists -----> the government’s basically in on the con.

1) Manufacturers slap a massive RRP on the car, then slash it with “discounts” -----> you feel like a savvy shopper.

2) Meanwhile, the government grins all the way to the bank: BIK for company car users, VAT for everyone else, plus that lovely first-year RFL hike on new cars.

So really, the government aren’t just in the game, they’re the sharks circling the pond while we’re all splashing around.

Grumpy_chap

singhini said:

, VAT for everyone else, 

VAT is only charged on the actual (pre-VAT) invoice value, not the list price.
VAT is also charged, one way or another, on company cars.

singhini

Grumpy_chap said:

singhini said:

, VAT for everyone else, 

VAT is only charged on the actual (pre-VAT) invoice value, not the list price.
VAT is also charged, one way or another, on company cars.

Take home message   ----->  VAT is charged

Grumpy_chap

singhini said:

Grumpy_chap said:

singhini said:

, VAT for everyone else, 

VAT is only charged on the actual (pre-VAT) invoice value, not the list price.
VAT is also charged, one way or another, on company cars.

Take home message   ----->  VAT is charged

Yes, but the context of your post upthread was that the RRP being high benefitted the Government by the VAT charged.  I was simply pointing out that the VAT is only charged on the actual value, not the RRP.

singhini

Grumpy_chap said:

singhini said:

Grumpy_chap said:

singhini said:

, VAT for everyone else, 

VAT is only charged on the actual (pre-VAT) invoice value, not the list price.
VAT is also charged, one way or another, on company cars.

Take home message   ----->  VAT is charged

Yes, but the context of your post upthread was that the RRP being high benefitted the Government by the VAT charged.  I was simply pointing out that the VAT is only charged on the actual value, not the RRP.

No i didn't say that -----> i mentioned RRP with regards to manufacturers (no mention of RRP on point 2)
i did claim the government benefit from BIK, VAT, RFL (not that VAT is charged on RRP) 

MyRealNameToo

singhini said:

Grumpy_chap said:

singhini said:

Grumpy_chap said:

singhini said:

, VAT for everyone else, 

VAT is only charged on the actual (pre-VAT) invoice value, not the list price.
VAT is also charged, one way or another, on company cars.

Take home message   ----->  VAT is charged

Yes, but the context of your post upthread was that the RRP being high benefitted the Government by the VAT charged.  I was simply pointing out that the VAT is only charged on the actual value, not the RRP.

No i didn't say that -----> i mentioned RRP with regards to manufacturers (no mention of RRP on point 2)
i did claim the government benefit from BIK, VAT, RFL (not that VAT is charged on RRP) 

May not have been what you meant but I read it the same as Grumpy. 

Businesses have to pay VAT on company cars too, sure if they sell VAT registered products they can offset 50% on company's sale VAT but if its supplies exempt products, like in my world, then there is no/minimal VAT recovery. 

VAT also depends on if it's a lease or sale, for leases the VAT is only charged on the rental fees to the hiring business. Its why there was the long court case against Mercedes on if their PCP should be treated as a purchase or service with HMRC eventually conceding it is a service when the balloon is set above the anticipated vehicle value at the point it comes due. 

singhini

MyRealNameToo said:

singhini said:

Grumpy_chap said:

singhini said:

Grumpy_chap said:

singhini said:

, VAT for everyone else, 

VAT is only charged on the actual (pre-VAT) invoice value, not the list price.
VAT is also charged, one way or another, on company cars.

Take home message   ----->  VAT is charged

Yes, but the context of your post upthread was that the RRP being high benefitted the Government by the VAT charged.  I was simply pointing out that the VAT is only charged on the actual value, not the RRP.

No i didn't say that -----> i mentioned RRP with regards to manufacturers (no mention of RRP on point 2)
i did claim the government benefit from BIK, VAT, RFL (not that VAT is charged on RRP) 

May not have been what you meant but I read it the same as Grumpy. 

Businesses have to pay VAT on company cars too, sure if they sell VAT registered products they can offset 50% on company's sale VAT but if its supplies exempt products, like in my world, then there is no/minimal VAT recovery. 

VAT also depends on if it's a lease or sale, for leases the VAT is only charged on the rental fees to the hiring business. Its why there was the long court case against Mercedes on if their PCP should be treated as a purchase or service with HMRC eventually conceding it is a service when the balloon is set above the anticipated vehicle value at the point it comes due. 

This thread is about BIK ------> please see the original post.

I mentioned VAT only to highlight that the government piles on multiple taxes; it’s not just the manufacturers who should be questioned for perhaps setting i high RRP

To be clear, I’m not interested in debating what VAT applies to or who technically pays it. My point is simply that the government charges a whole range of taxes, and that’s why I called them “Sharks.”

Both of you @Grumpy_chap and @MyRealNameToo have also acknowledged that VAT is paid, so I’m not sure why we’re getting stuck on the details. VAT is paid. That’s it.

EDIT: I’m not looking to start an argument with anyone, I’m just feeling pretty frustrated with all the taxes (hence why i had a dig at the government and not the manufactures).