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The taxman's taking the list

Date: 05 September 2007

The Insider is a fleet manager with years of invaluable experience

Monster car discounts at the brokers illustrate how crazy taxing cars based on the list price really is, says the Insider

So, Mr Taxman, tell me this: how much does a new car cost? Now here's the question again. How much money would you need to buy a new car? This isn't trick question. The two answers are completely different, and that difference is costing me and my drivers money.

We all know about fleet discounts, and we loyally stick to a code that prevents us from openly discussing the size of those discounts. So for the purpose of this argument, I'm going to use real-life, up-to-date discounts offered by brokers.

Brokers are those web-centric companies that off-load UK dealer stock that dealers themselves are finding hard to shift, much like we get offered discounts on certain models. They've got names like Broadspeed, Drive the Deal and New Car Discount and carry with them a lingering whiff of 90s Dutch-posted VW Golf imports.

They all sell UK dealer cars these days, and some of the prices are really cheap. Drive the Deal right now will sell you a new VW Touran 2.0 TDI SE for £16,383, a cut of almost three grand. Or there's a Renault Clio 1.4 16V Dynamique 5dr for £9226, which is £2084 less than list.

“Broadspeed has a 57-plate Renault Grand Scenic 1.5 dCi Expression for £12,735 - or £5000 off the list price.”

The Insider

Broadspeed has a 57-plate Renault Grand Scenic 1.5 dCi Expression for £12,735 - or £5000 off the list price. A BMW 118d 3dr drops £2291. Sonnauto has Meganes for nearly £5000 less than Renault reckons they should sell for (nearly everyone has cheap Meganes) and even discounts the new Mondeo to as low as £12,625.

You get my point. These are typical fleet cars, selling for much, much less than P11D prices. Take the Ford Galaxy 2.0 TDCI Ghia from Drive the Deal. List price: £23,995, their price: £18,107. Almost six thousand pounds less. If I was to buy that for a 40% bracket driver, he would have to pay £2283 a year in tax. Had it been calculated at the discount price, it would only be £1738. Put another way, he's being penalised £545 a year because the gullible taxman is taking the word of an over-optimistic manufacturer. Or, more realistically, the greedy taxman is whistling and looking the other way.

Ah but, you might say. You've just saved yourself £6000 and the employee is now able to drive a car previously outside the reach of his allowance. All true, but it's hardly an isolated incident. The more bread and butter fleet cars are always being discounted. Sometimes you don't see it because it's wrapped up in monthly payments from finance companies, something the manufacturers like because the scale of the discounts are hidden from the rare punter who might actually stump up the full £24k for a Galaxy Ghia.

I suspect that nothing can be done. Car prices are always going to fluctuate, taxmen are always going to insist on a set figure, manufacturers are always going to maintain the illusion of a price list for the sake of residuals among other reasons, and the Government isn't about hand me or my drivers a tax rebate just because I bought cheaper cars. But it won't stop me complaining about it.