Recent Auto Trader research shows confusion surrounding the New Year rise in VAT could hit drivers hard.
Most people are unaware that not only will VAT return to the usual rate of 17.5%, but that the government’s car scrappage scheme will be ending in February 2010 – a double hit for the one in twenty drivers intending to buy a car in the next three months.
Millions could be lost in car sales if drivers remain unaware of this information and 55% of those surveyed believed this was a way of getting more money from taxpayers.
Rise in VAT to hit consumers’ wallets in 2010
Research from Auto Trader shows that Britons are unaware and unprepared for the rise in VAT
• 12 million Britons unaware of the rise in VAT in 2010
• 30% say they will be forced to take a closer look at spending habits
• 55% believe the increase is an attempt to make money from taxpayers
London, 24 November 2009 – New research from Auto Trader reveals that the imminent rise in national VAT will have a significant effect on consumers in 2010, with 30% of people admitting they will be forced to reconsider their spending habits.
Confusion over the rise in VAT
National VAT, currently at 15%, is expected to return to the usual rate of 17.5% next year, yet the research found that 12 million Britons are unaware of this. The results also highlight a lack of consumer awareness over the impact the rise could have, especially on large purchases. Of those intending to buy expensive items such as televisions, holidays or cars, the majority (55%) did not plan on bringing these forward before VAT increases.
The research also exposed a lack of trust in the government’s intentions, finding that 55% of people believe the increase is an attempt to make money from taxpayers. In addition, one in 10 people expect the government to raise VAT to 20% instead of returning to 17.5%. Those questioned also felt the increase would backfire in the long term, with a quarter of people believing it will become harder for Britain to come out of the recession.
Millions could be lost on car sales
Those planning on purchasing cars are in for the biggest shock as the rise in VAT is not the only threat to consumers’ wallets. One in 10 people are unaware that the government’s car scrappage scheme, which offers £2,000 towards the cost of a brand-new vehicle when trading in a vehicle over 10 years old, comes to an end in February. With one in 20 people intending to buy a car at some point in the next three months, delaying that decision could mean UK drivers miss two opportunities to save money.