How to beat the VAT increase - Tax is, unfortunately, a bit taxing
Place an order before the increase in VAT on January 4, 2011, and a tax point can be created, which makes the purchase liable to the 17.5% rate. This applies even if the balance isn't paid until the car is delivered, and this can be up to six months after the order was placed. While, it doesn't apply if you're buying on finance, it does cover you if you're using a personal loan to clear the balance.
Unfortunately, some car dealers either don't want to play along, because they have to raise a VAT invoice and pay the tax due before full payment is received, or they just don't know how the system works.
Posing as car buyers, we asked 30 dealers if we could avoid paying the 20% VAT and were showered with a confusion of dates and contradictory opinions.
Many told us it could be avoided only if the full balance was paid before the end of the year, or if the car was registered this year. Some simply said it could not be avoided at all. Only three dealers appeared to know the facts and offered the best help possible.