£40k tax threshold before or after VED?

[Foxy367]

6% is massive.

It’s shameful that the additional “luxury” VED has been set at £40k since 2017 and has never been increased in line with car list price increases.

I like a VW as much as anyone here, but a golf is hardly “luxury” is it, in 2017 the additional tax was mainly reserved for the expensive end of the SUV market.

I could rant about this all day….. but I shan’t…. It’s Christmas after all

Yet another stealth tax for the squeezed middle earners!!!

[Korszun]

I've been caught by this too.  Under 40k list when I ordered in Feb, the price rises have pushed it above and my dealer is telling me if I change spec to get it back under the threshold I will effectively go to the back of the queue for delivery so I'm sticking with what I ordered.  Very unhappy and I have complained bitterly, I have got nowhere with this a yet though

[SRGTD]

The way the ‘luxury’ VED is applied / implemented will be down to HM Gov rather than VW. Complaining to VW or the dealer is unlikely to achieve a successful outcome, unless the dealer is prepared to pick up the bill for the additional VED for five years which is unlikely IMHO.

Agree with @Carl_45; the £40k threshold should increase year on year by an inflationary amount. However, by not doing this, more new car purchasers will fall into the luxury VED net so it’s not in HM Gov’s best interests to inflation link the £40k threshold, especially as its a way of generating revenue to offset the zero VED rate on electric cars.

[Korszun]

The way the ‘luxury’ VED is applied / implemented will be down to HM Gov rather than VW. Complaining to VW or the dealer is unlikely to achieve a successful outcome, unless the dealer is prepared to pick up the bill for the additional VED for five years which is unlikely IMHO.

Agree with @Carl_45; the £40k threshold should increase year on year by an inflationary amount. However, by not doing this, more new car purchasers will fall into the luxury VED net so it’s not in HM Gov’s best interests to inflation link the £40k threshold, especially as its a way of generating revenue to offset the zero VED rate on electric cars.

Fully agree with you and @Carl_45 but the only organisation I have an agreement with is the dealer and actually since the price is within the control of VW and the dealer does have the ability to reimburse me, I feel it's worth pursuing.  There are others on this forum who have reported success with this approach.  I can't really complain to HMRC.

At the very least, I'm finding some catharsis in dragging a complaint through their system considering how much of a ball ache ordering a new car has turned out to be.  Trying to be the squeakiest wheel and all that.

[Guzzle]

I suppose what it may boil down to is whether or not the possibility of this happening came as a surprise to you or your dealer.

If the dealer knew your car was going to be on such a long lead time and didn't explain any of this to you, then I'd say you'd have a legitimate grievance. But I'm not sure how you'd go about proving what the dealer did or didn't know.

My dad had a similar issue with Land Rover back when the £40k threshold for luxury car tax was first introduced. He'd agreed with the dealer in writing that the car would be delivered before the new rules came into force. The car was registered late, and so they compensated him.

[SRGTD]

I suppose what it may boil down to is whether or not the possibility of this happening came as a surprise to you or your dealer.

@Korszun; it’d be worth checking the T’s & C’s of your initial order documentation. There may specific terms in the small print that cover the situation where a car’s list price increases and moves it above the luxury VED threshold.

If the dealer knew your car was going to be on such a long lead time and didn't explain any of this to you, then I'd say you'd have a legitimate grievance. But I'm not sure how you'd go about proving what the dealer did or didn't know.

That’s a very good point. I see from the ‘Clubsport order thread’ that @Korszun ordered their car in Feb 2021. At that time I dare say dealers genuinely may not have known or anticipated the impact that semiconductor shortages and Covid would still be having on VW’s ability (or inability) to build cars at the end of 2021 and push out build dates on Feb 2021 orders well into 2022. If they did know, would they have disclosed that information to a customer and risk losing a sale? Who knows?

[Korszun]

I suppose what it may boil down to is whether or not the possibility of this happening came as a surprise to you or your dealer.

@Korszun; it’d be worth checking the T’s & C’s of your initial order documentation. There may specific terms in the small print that cover the situation where a car’s list price increases and moves it above the luxury VED threshold.

Ts and Cs have been checked and there isn't really any protection there.  However, interestingly back in about March/April when I first realised about the existence of the luxury VED rate (but didn't yet understand exactly how it was applied) I actually visited the dealership in person to check with the sales guy if my order was above or below the threshold.  He reassured me (unfortunately only verbally) that I was ok as the list price at the time of order was <40k.  Later on, I did my own research and found that the VED is applied to the vehicle according to the list price on the day before the car is registered so I was actually given incorrect advice.

If the dealer knew your car was going to be on such a long lead time and didn't explain any of this to you, then I'd say you'd have a legitimate grievance. But I'm not sure how you'd go about proving what the dealer did or didn't know.

That’s a very good point. I see from the ‘Clubsport order thread’ that @Korszun ordered their car in Feb 2021. At that time I dare say dealers genuinely may not have known or anticipated the impact that semiconductor shortages and Covid would still be having on VW’s ability (or inability) to build cars at the end of 2021 and push out build dates on Feb 2021 orders well into 2022. If they did know, would they have disclosed that information to a customer and risk losing a sale? Who knows?

Sadly, I think the dealer didn't know the lead time was going to be so long but you're right, we're never going to find out for sure.  The additional VED is going to cost me about £1000 over the course of my agreement because my configuration is about £150 over the 40k - it's a bit of a sickener to say the least.  I would prefer to swallow the tax and have the opportunity to fully load the car rather than what I currently have but this will also extend delivery and I really need a car as my lease has now gone back as the extension expired so I have had to buy a runabout to cover the gap.

[king monkey]

Didn’t a forum member get their dealership to pay the difference for the duration of the luxury tax after a similar issue?

[Korszun]

Didn’t a forum member get their dealership to pay the difference for the duration of the luxury tax after a similar issue?

Yes, I've seen one example on here and another on a Facebook group.  With the horrendous delays and price rises though, it wouldn't surprise me if the large dealer groups put a moratorium on that as I'm guessing it has affected a lot of people.  I remember someone saying it pushes an Edition 45 with no options from regular into luxury tax territory.  Still, I think it's worth pushing to be reimbursed.

The way the tax is applied could be fairer too, I think it should have a ramp rather than simply applying it at the full rate the moment you go a penny over 40k but hey, I'm certainly not expecting any sense to come out of the government.

[Carl_45]

I don’t understand why it was ever done this way at all.  It’s obviously a tax generator from those the government believe can afford it.

But, why not simply have put it on to the registration fee on all new cars with a list price of over £40k. That way, the customer wouldn’t have been put off so much, especially used car buyers, and the dealers could have used it as a bargaining tool (i.e. in slow sales months they could have ”paid” the additional tax by reducing the monthly payment by the equivalent amount).