Hi Guys, looking into buying a new VRS and basically slightly confused how the salesman has got to the following figure

Basic RRP £16,260, I added some extras so the Total increases to £17,545 all inc VAT

The saleman has worked the saving (20% VAT) out at £2809.16?

Is that correct? I can't see how he got to that figure

http://briskoda.net/forums/topic/192352-20-vat-free-discount/page__pid__2311784#entry2311784

Thanks jrw, I had a look at this post but didn't get a definitive answer on how he's worked the figure out

It does look about right but difficult to say exactly without seeing the exact options and 'on the road charges'.

Just remember you don't simply take 20% off the RRP to work out the offer price.

It does look about right but difficult to say exactly without seeing the exact options and 'on the road charges'.

Just remember you don't simply take 20% off the RRP to work out the offer price.

The dealer needs to give you the equivalant of the VAT back

Ignoring the on the road stuff, before the offer, if the Recommended Basic price of the Car is £100 then the normal price to you would be £100 plus 20% = £120. In this case the dealer/factory get £100 and the VAT man gets £20 (20% of £100)

Now for the deal!

You want the car for £100 ie £20 less. To get to this end position, (don't worry about the maths), if the basic price is reduced from £100 by £16.66666 to £83.3333333,

then the VAT is 20% of £83.33333 = £16.66666

and the selling price is £100 = £83.333333 + £16.666666

You get the car for £100, ie £20 less than the price before the deal.

The dealer/factory have taken a £16.666666 hit and the VAT man has taken a £3.333333 hit.

Regards

retiredbri

Thanks RetiredBri, that clears it up

Hi Guys, looking into buying a new VRS and basically slightly confused how the salesman has got to the following figure

Basic RRP £16,260, I added some extras so the Total increases to £17,545 all inc VAT

The saleman has worked the saving (20% VAT) out at £2809.16?

Is that correct? I can't see how he got to that figure

From what i understand you have said I think the calculation is as follows

Full OTR price is £16,260.00 - now this includes some amounts which do not have VAT added so from the brochure there is £2,595.00 VAT included in that price

Your Total OTR price inc VAT is £17,454.00

This means you have £1194.00 of extras inc VAT (£17,454.00 - £ 16,260.00)

Of this £1194.00 there is £199.00 VAT

So I work out that your VAT saving should be £2,595.00 (Car) + £199.00 (Extras) which gives £2794.00 which is not far from the dealers calculation.

More importantly is this price that the dealer has quoted that your paying correct? I think this should be £14,660.00

(£17,454.00 - £2,595.00 - £199)

Edited 15 March, 201115 yr by adam1985

Thanks RetiredBri, that clears it up

I remembered the formula. To get 20% off, then the discounted basic = old basic x (1/(1+20%))

Here, (1+20%) = 1.2

and 1 divided by 1.2 = 0.8333333

old basic = £100

new basic = £100 multiplied by 0.8333333 = £83.333333

Discount = 16.66666%

Rememeber, the discount is only applied to the Recommended basic plus factory fitted options. The "on the road" extra price is not discounted. The VED and first registration is VAT free.

Retiredbri