If it's the same as cars, the VAT on used bikes is calculated in a very different way. The seller only charges VAT on his profit margin.
That would sound reasonable as you aren't subject to VAT when you trade in a vehicle, so dealer can't recover it from you as he can suppliers of new goods.
its a £15k bike, vat is rolled into the overall figure it is worth what people will pay. What you do lose imo is the dealers profit margin plus a chunk on top to allow a markup in the trade and for the vehicle to offered back on sale again priced less than a new one. a vat free product eg commercial vehicle, would still be worth a significantly reduced used price similar in percentage terms i would bet when it leaves the showroom, and no vat is involved!
Not strictly true, unless there is something magical about the way traders can reclaim vat. Regardless of new or used, Vat is payable at the same rate (20%) on the sales price. Vat is only payable once on anything though. So if you buy a bike through your company and reclaim the vat at purchase, and then sell the bike for lets say 2k4 (including vat), 400 of that has to be paid as vat. You can see that the only thing that changes is the sales value. With regard to a bike/car losing money as soon as you take it off the forecourt, it has nothing to do with the vat. It is because you have paid retail price to buy it, but if you want to trade it back, you will only be offered trade price (unless of course you sell it privately). Occasionally a trader might get close to the retail price if they know they are either going to make sufficient profit on the new vehicle you are buying, or there is still enough margin on what your trading in. Its just a numbers game.
A trader only pays VAT on the profit margin he makes on a s/h vehicle. HM Revenue & Customs: Motor dealers and VAT: selling new or used vehicles and extras
OK, thanks for the link, I'm not a trader so wasn't aware they pay vat on the margin. It says vat is payable at the standard rate on a new vehicle, as I said though. What I described is the situation for a company purchaser, (i.e. the owner of the vehicle) as that is realistically the only time vat comes in to play for an owner. If the company sells the vehicle back to a dealer then the invoice will show vat, and once again the dealer cannot use the margin scheme... It still holds that the price a dealer will buy back a vehicle for has little to do with the actual vat content, its down to the difference in trade and retail prices, and also whether the vehicle you are trading in is something they can sell or will simply pass on in the trade. I am aware a local (non ducati) dealer has been taking MTSs in as exchanges and only paying in the order of 7k for them, because they cannot put them in their show room but still want to make some money off them when they pass them into the trade. Vat doesn't enter into it, its what they can get the customer to swallow and still let them (dealer) make a margin. We seem to be getting a long way off topic now. All interesting stuff though
'Profit Margin' is the difference in selling price over buying price less costs incurred 'Value added' is improvements made Not sure they are the same thing HM Revenue & Customs: Motor dealers and VAT: selling new or used vehicles and extras Is primarily to restrict the practice of selling new cars as used, to reduce tax
