Discussion
Hi, I am a new member here and after a bit of help.
I am a wheelchair user, so am highly likely to be able to buy a car free from vat under HMRC rules. This now can be a new or used (vat qualifying) vehicle. As funds are tight I prefer the latter route, and my ideal car (due to space needed) is an estate car.
I am thinking of a BMW 3 series with a small diesel engine. I understand that when buying a new car it is easy to evaluate whether you are getting a good deal since the car (being new) can be directly compared to other dealers or brokers, as you can compare like with like
However the problem arises when buying a nearly new car esp BMWs. As there are more or less an infinite number of variations in specification and mileage etc in these cars it is impossible to compare one used car's price with another elsewhere. How would I go about this?
One way I have thought it to see roughly what price a similar new BMW would be list price), then compare that to online brokers' prices. The percentage saving over and above the list price should be the same on a used car or not?? Or is this totally wrong?? Is there a better method other than just simply take 10% or so off what the dealer is asking and offer that?
Also how does vat qualification actually work? I understand ex lease cars etc are all vat qualifying, but is the gross price of these exactly the same as an identical non qualifying car in the same dealership? If so are there smaller margins for dealers on VQ cars?
I'm sorry about a long winded first post!
I am a wheelchair user, so am highly likely to be able to buy a car free from vat under HMRC rules. This now can be a new or used (vat qualifying) vehicle. As funds are tight I prefer the latter route, and my ideal car (due to space needed) is an estate car.
I am thinking of a BMW 3 series with a small diesel engine. I understand that when buying a new car it is easy to evaluate whether you are getting a good deal since the car (being new) can be directly compared to other dealers or brokers, as you can compare like with like
However the problem arises when buying a nearly new car esp BMWs. As there are more or less an infinite number of variations in specification and mileage etc in these cars it is impossible to compare one used car's price with another elsewhere. How would I go about this?
One way I have thought it to see roughly what price a similar new BMW would be list price), then compare that to online brokers' prices. The percentage saving over and above the list price should be the same on a used car or not?? Or is this totally wrong?? Is there a better method other than just simply take 10% or so off what the dealer is asking and offer that?
Also how does vat qualification actually work? I understand ex lease cars etc are all vat qualifying, but is the gross price of these exactly the same as an identical non qualifying car in the same dealership? If so are there smaller margins for dealers on VQ cars?
I'm sorry about a long winded first post!
Hi OP 
I won't answer the VAT question, as there are many people more qualified than I on here, who will answer that!
You're right. When buying used, there are a myriad of options which can push prices all over the place. So, regarding making sure you buy at the right price, to be honest, the best thing to do is post up your list of requirements and budget & let the PH sleuth squad find you a number of options (if you've spent time lurking on here, you'll know that you'll get some very leftfield suggestions as well, which is a very good thing!).
I won't answer the VAT question, as there are many people more qualified than I on here, who will answer that!
You're right. When buying used, there are a myriad of options which can push prices all over the place. So, regarding making sure you buy at the right price, to be honest, the best thing to do is post up your list of requirements and budget & let the PH sleuth squad find you a number of options (if you've spent time lurking on here, you'll know that you'll get some very leftfield suggestions as well, which is a very good thing!).
Scuffers said:
unless the car in question is a hire car etc, the VAT will have already been paid on it, so there is NO VAT on a second hand car (or to be more accurate, the VAT has been paid when it was new and can't be recovered).
Err, yes there is!!If VAT was claimed on the new car by a company purchaser, it will be sold with VAT.
Also all 2nd hand cars sold by dealers have a VAT element in them.
if a car has fallen into private hands the vat is lost, however if a business buys it and runs it as part of their business then the vat can be reclaimed. However on sale to the dealer they have to pay vat on sale price. The dealer then being vat registered himself does similar, therefore on some cars (vat qualifying) 100% of the vat can be recovered. That is my understanding at least !
JohnDeere8530 said:
if a car has fallen into private hands the vat is lost, however if a business buys it and runs it as part of their business then the vat can be reclaimed. However on sale to the dealer they have to pay vat on sale price. The dealer then being vat registered himself does similar, therefore on some cars (vat qualifying) 100% of the vat can be recovered. That is my understanding at least !
You are correct.confused_buyer said:
The end user can only ever claim the VAT back if the car is used 100% for business purposes. This includes travel to/from work so the car has to stay at the business premises. Any private or commuting use at all and it cannot be claimed back.
I don't think you are entirely right there.Are you confusing BIK with VAT?
paoloh said:
Scuffers said:
unless the car in question is a hire car etc, the VAT will have already been paid on it, so there is NO VAT on a second hand car (or to be more accurate, the VAT has been paid when it was new and can't be recovered).
Err, yes there is!!If VAT was claimed on the new car by a company purchaser, it will be sold with VAT.
Also all 2nd hand cars sold by dealers have a VAT element in them.
there are limited companies that can actually claim the VAT back on cars (hire fleets etc), most ordinary companies can't irrespective if they are VAT registered or not.
a second hand car sold by a dealer has NO VAT content as such, the dealer has to pay VAT on his margin, NOT the car per say.
Pickup's etc are another matter as they usually are VAT claimable, right up to the point that they become owned by a NON VAT registered owner, thus VAT is un-recoverable from that point on.
ok thanks for the vat side of things, it has reinforced what I thought.
So on to getting value in buying an approved used VQ car from a dealership. How should I go about getting the car at the best possible price? As mentioned earlier it is not a case (as in new car) comparing like for like with a broker or other dealer elsewhere since there is more or less and infinite amount of variation in a used car. Would you say 10% is reasonable ?
So on to getting value in buying an approved used VQ car from a dealership. How should I go about getting the car at the best possible price? As mentioned earlier it is not a case (as in new car) comparing like for like with a broker or other dealer elsewhere since there is more or less and infinite amount of variation in a used car. Would you say 10% is reasonable ?
JohnDeere8530 said:
ok thanks for the vat side of things, it has reinforced what I thought.
So on to getting value in buying an approved used VQ car from a dealership. How should I go about getting the car at the best possible price? As mentioned earlier it is not a case (as in new car) comparing like for like with a broker or other dealer elsewhere since there is more or less and infinite amount of variation in a used car. Would you say 10% is reasonable ?
Can I just point out my post about Motability. If you want a good deal, then check them out. you can get amy car you want for bugger all.So on to getting value in buying an approved used VQ car from a dealership. How should I go about getting the car at the best possible price? As mentioned earlier it is not a case (as in new car) comparing like for like with a broker or other dealer elsewhere since there is more or less and infinite amount of variation in a used car. Would you say 10% is reasonable ?
paoloh said:
confused_buyer said:
The end user can only ever claim the VAT back if the car is used 100% for business purposes. This includes travel to/from work so the car has to stay at the business premises. Any private or commuting use at all and it cannot be claimed back.
I don't think you are entirely right there.Are you confusing BIK with VAT?
Any personal use, including commuting, and you can't claim the VAT.
Edited by confused_buyer on Thursday 20th January 22:20
From the horses mouth:
Reclaiming VAT when you buy a car
Generally you can't reclaim the VAT when you buy, import, or in some other way acquire a car. But there are some exceptions to this. You can reclaim all of the VAT if you meet one of these conditions:
* The car will be used exclusively for business purposes and you can show that it's not available for private use by your employees or anyone else. For example, your employees' contract of employment excludes private use including travel from home to the place of work.
* You intend to use the car mainly as a taxi, a driving school car or a self-drive hire car.
* You're a car dealer and the car will be part of your 'stock in trade' that you intend to sell within the next 12 months.
http://www.hmrc.gov.uk/vat/managing/reclaiming/mot...
Reclaiming VAT when you buy a car
Generally you can't reclaim the VAT when you buy, import, or in some other way acquire a car. But there are some exceptions to this. You can reclaim all of the VAT if you meet one of these conditions:
* The car will be used exclusively for business purposes and you can show that it's not available for private use by your employees or anyone else. For example, your employees' contract of employment excludes private use including travel from home to the place of work.
* You intend to use the car mainly as a taxi, a driving school car or a self-drive hire car.
* You're a car dealer and the car will be part of your 'stock in trade' that you intend to sell within the next 12 months.
http://www.hmrc.gov.uk/vat/managing/reclaiming/mot...
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