subject: Avoid Uk Vat Increase With A 0% Credit Card [print this page] After the down-times brought on by recession, government made the decision to cut VAT in an effort to get people spending and in turn stimulate economic growth.
However, this was only ever going to last for a short while, and now the UK is officially out of recession the government will be increasing VAT to 20% as of January 4 2011 to make up for the previous short-fall
As the increase is getting close, a popular topic of debate is how consumers can lessen the impact the rise will have.
Several motor brands have launched high-profile campaigns aimed at those looking to beat the VAT rise and save money, which will put pressure on sales in the new year.
The latest car manufacturer to offer protection against the VAT hike is Land Rover.
However, some experts have said that in theory consumers should be able have a car paid for and delivered up to six months after the increase without having to pay the new higher rate.
By placing an order against a new car before the changeover date you will trigger a tax point to be created, effectively allowing you to pay for the car next year. This does not apply to finance deals, but is valid when paying with a personal loan.
However, this 'loop-hole' will not work with all dealers, as many either won't understand the concept or will be reluctant to process the transaction like this as they may need to pay the VAT before the full payment is received.
Results from one survey showed that there is a great deal of confution amoung both consumers and car dealers. Thirty dealers were contacted and asked whether the VAT rise could be avoided. The results showed that dealers did not have knowledge of any measures that could be taken to do so, while several were unclear of dates and had voiced various opinions.
Many people believed that it could only be avoided if the balance was paid in full before the start of 2011, while others were under the impression that if the car was registered in 2010 the increase would not apply.
However, it's not just cars that consumers can save on, as many consumers turn to 0% credit cards allowing them to buy now at the lower VAT rate while making repayments in the new year.
Use your 0% purchases card to pay for your items and pay off at least the minimum monthly amount to avoid interest charges. Ensure you clear your balance within the 0% duration and you will avoid the 2.5% increase
Tesco are currently offering 13 months 0% on purchases, so you could either pay a small amount each month then clear the card before the 13 months is up, or alternatively split the total balance between the 13 months and pay the card off gradually.
