This was written in Auto Express and might be of interest.
'If you put down a deposit for a new car before 4 January, that will incur VAT at 17.5%. Pay the balance on collection after that date, and this will be levied at 20%. Ultimately this is for the dealer to worry about because the dealer has to account for the transaction to the authorities. If you do get an invoice to pay the full amount for the car and it is dated earlier than 4 January, it should say 17.5%. That document will cover the whole transaction, even if it is split into a deposit and balance.
If you're buying a new car between now and 4 January, make sure the sales staff clarify which VAT rate you will be paying. As a general rule, if the deal has been done and fully paid for before that date, it should be levied at the lower rate of 17.5%.
How you pay for a car can make a difference. For example BMW told us that if a customer is using cash or arranging their own finance and the deal is agreed before 4 January, they will pay 17.5% VAT regardless of the delivery date. But, if they buy the car via BMW Financial Services (BMWFS), the VAT rate is determined by the date BMWFS pays the dealer.The date on the customer's finance arrangement is irrelevant.
Some manufacturers have announced a customer 'price promise' if a new car is ordered before 4 January but not delivered until after that date. It means that they will honour the 17.5% VAT for your transaction. Check whether this applies to you.
If in doubt clarify with the dealer and get something in writing to confirm exactly what sum you will be paying and what rate at which VAT will be charged'.