Consumers buying ahead of VAT rise

With the new year just around the corner, some customers are in a race against time to beat the VAT increase in January.

From January 1 onwards, VAT will rise from 17.5% to 20%. Though this will not affect small purchases greatly, those looking to make major investments could be in for some big surprises.

According to a survey commissioned, 37% of customers are purchasing goods ahead of the VAT rise in 2011.

Though the 2.5% rise seems only minor, it can seriously affect the prices of new vehicles. For instance, the Ford Focus Zetec 1.6 3dr hatchback, which comes with a price tag of £15,545, will shoot to £15,994, a £389 increase, which could be sufficient to buy a DAB audio system for instance.

Furthermore, those looking to purchase a BMW 535d Touring, will have add £1,108 extra for the price increase from £44,320 to £45,428, following the VAT rise. Those going a step further to buy the expensive Range Rover Autobiography will have to shell out an additional £2,200 with the price shooting to £86,095.

It is expected that with such price increases, customers will stay away from the market January onwards. Taking this opportunity, where the prices are still affordable, dealers are offering attractive deals to lure customers.

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