VAT income will be £100m greater than investment in scrappage
21 September 2009

The government will make more than £100 million profit from VAT revenue on cars sold under scrappage, according to initial reports.

Under the scheme, the government and car makers split paying the £2000 subsidy between them. With VAT at 15 per cent, that means the Treasury makes a profit whenever a car costing more than £7600 is sold.

According to the motor industry the average price of cars bought under the scheme has been £9000. This means that the Treasury is on course to net £405m in VAT receipts, £105m more than is being invested in the scheme.

The revelation comes as the government is put under increasing pressure by the car industry to extend the scrappage scheme into next year. The initial £300 million is projected to run out at the end of October.

However, critics argue that many of the cars bought under scrappage would have been sold regardless of the scheme.

Garel Rhys, emeritus professor at Cardiff Business School, said: "The Government is getting a lot in VAT. But the money is being given to the car owner, who is being subsidised by the taxpayer."

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5

21 September 2009

My car at work is four years old, was planning on changing it about now but thanks to the scrappage scheme prices for example of a Mini or a Fiesta have been inflated artificially and now the idea is off and am going to wait 'til things settle down.

It has also inflated the price of used cars too, so a person on low pay who say budgets £2k on a used car is subsidising people who buy a new car, which may well be also bought on finance with money from a bank which is being subsidised by being lent money from the Bank of England at 0.5% then offering it back to them at a higher rate, look at this loan shark for example http://www.natwest.com/personal/loans.ashx where is a guillotine when you need it? If I am wrong please explain why.

21 September 2009

The scrappage scheme has made little real impact on the value of used cars. Any car that qualifies for the scheme entitles you to £2000 discount on a new car. Most of the time, you can get more than this anyway.

It does not mean that a £600 runabout suddenly becomes £2000.

Perhaps the only downside is that there will be 300,000 fewer 10 year old cars to choose from. Given the amount of cars on the market at any one time, this is unlikely to make much of a difference.

21 September 2009

Used car values have shot up in the last months due to 2 main factors, lack of nearly new stock (new cars not being sold and nearly new being snapped up instead resulting in a dominoe effect through the rest of the used car market) and also because used car values fell so sharply this time last year. My CR-V was losing around £600 per month on a good month and is now worth £300 less than it was just over a year ago all its done is bounce back thankfully.

New cars went up in price but as far as I'm aware all price increases I know of were known about even before even VAT was brought down to 15% and an aghe before the scrappage scheme was brought in.

21 September 2009

[quote Autocar]The government will make more than £100 million profit from VAT revenue on cars sold under scrappage, according to initial reports.

Under the scheme, the government and car makers split paying the £2000 subsidy between them. With VAT at 15 per cent, that means the Treasury makes a profit whenever a car costing more than £7600 is sold.
[/quote]

more lies from mendacious Mandelson and his flunkey partners in mass deception at SMMT me thinks. According to SMMT's own propaganda:

http://www.smmt.co.uk/articles/article.cfm?articleid=20429

Hyundai/Kia group has been the runaway winner of scrappage scheme in UK, with one in five of all 100,000+ scrappage-funded sales thus far going to the Korean company. From Hyundai's own website we have the following:

http://www.hyundai.co.uk/newCars/offers/details/?ref=335

Here are some highlights of the Hyundai Top-up Plus offers available for Scrappage Scheme customers between 10th August 2009 and 30th September 2009:

Model

Manufacturer's Recommended OTR Price

Government scrappage contribution

Hyundai contribution

Total saving

New OTR price with scrappage incentives

i10 Classic 1.2

£7,400

£1,000

£1,205

£2,205

£5,195

i20 Classic 1.2 (3dr) 2010MY

£8,850

£1,000

£1,255

£2,255

£6,595

i30 Comfort 1.4 (hatchback)

£11,600

£1,000

£2,605

£3,605

£7,995

Coupe SIII 2.0

£18,030

£1,000

£5,035

£6,035

£11,995

Note: please click link above to Hyundai's website as A/car's composing of posts cuts off right-hand colums of complete table above.

of the four offers only two would give a VAT payment of more than the Govt. scrappage (taxpayer-funded)contribution. We know already that the vast majority of Hyundai's scrappage sales have been for their very cheapest offerings, the i10 and i20, where the UK taxpayer loses out by up to £320 per sale (£1,000 scrap contributon minus £680 in VAT).

Similar with Kia:

http://www.kia.co.uk/New-Cars/Range/Compact/Picanto/Scrappage-Scheme.aspx

http://www.kia.co.uk/New-Cars/Range/Compact/Rio/Scrappage-Scheme.aspx

that's a £410 taxpayer loss on a Kia Picanto.

and Fiat:

http://www.fiat.co.uk/Content/?id=17415

A Panda for £5k and a Grande Punto for £6.7k. That's £350 taxpayer loss on the Panda and £125 on the Grande Punto.

Come on Autocar do some analysis and checking of facts yourself. We live in deceitful times and nothing but nothing can and must be taken at face value.

Let's not forget too that around 90% of scrappage-funded car sales are imported cars. A further hit of hundreds of millions of pounds on the already worst trade deficit in Europe is a lunatic idea.

22 September 2009

I find it hard to believe that the averavge scrappace car costs £9000

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