Order new cars now to avoid VAT rise
04.10.2010 - Rhian Angharad Jones
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Motorists considering buying a new car should act now to avoid January's VAT increase. Many buyers are unaware that VAT is applied when the invoice is issued - which is usually at the time of delivery - and not when a car is ordered. Combine this with delays in the supply of new cars and it could mean buyers will be unable to beat the increase.
The VAT rise from 17.5 to 20 per cent on January 4, 2011, will see £375 being added to the VAT-inclusive price of an £18,000 car.
The warning comes from used car price guide CAP, which says a shortage of new cars could make the situation worse. For example, Volkswagen is seeing delivery times of 12 to 14 weeks, which is more than twice the time it usually takes to build and deliver a car to a customer.
The delay is being blamed on the recession, coupled with the weak Euro, leading manufacturers to reduce car production and focus on supplying other countries.
CAP's Mark Norman said: "Anyone with imminent plans to buy a new car needs to move now, especially if they have a specific model in mind because they may already find they cannot beat the VAT increase. The need to make enquiries early is particularly urgent if you want optional extras because they will be subject to special factory build, with little or no chance of a suitable car already being in stock."
