Help - Car lease issue.....

Here's another one for the TZ community think tank.


We leased my wife a car 12 months ago, a Cupra Ateca which was a pretty good deal at the time, it was for 4 years with 5000 miles a year. She loves it.

A month ago we got a letter from the leasing company (not the selling agent company) to say there was an increase to the road tax due and they will be collecting the additional amount with the following month's direct debit. Fine, I thought, it's probably just gone up by £10 or so.

But the increase charged was £498.

On investigation, it seems that the selling agent has stated the P11D car value on our lease paperwork as £38,785 but the P11D value the DVLA has put on the car is £40,050, meaning that road tax is £355 higher for each of the years we will have the car.

Crazily, despite the Road Fund License (RFL) being VAT exempt, once that charge is passed from the lease company to us, it becomes a "sale" which IS vattable, hence we have to pay the higher rate RFL fee of £355 per year, plus VAT!!


We went back to the the lease company who flatly refused to engage in a conversation and told us it was the selling agent's issue (UK Carline). They agreed it was an issue and seemed unfair, and would investigate. We had assumed they'd take responsibility and pay the additional fee for us,.

Today, they've sent us their "Official and final response" to our complaint and have told us we have to pay the extra. They've offered to credit us £250 on this occasion but will not pay anything towards the fee next year or the year after.

My wife and I are amazed and seriously angry.

How can it possibly be our fault, when our paperwork clearly shows the P11D value of £38k and they never informed us of the increase at any point. In fact, we assume the first they even knew was 2 weeks ago when we raised the issue with them.


We're feeling rather shafted and powerless. This issue must happen quite regularly with this new £40,000 higher rate road tax rule.

The error on your paperwork surely lands them in it - as in threaten a CCJ if you have to pay the road tax increase for the contact duration.

P11D excludes first registration & road tax but that can't add up to 1265 surely ?

Are there any get out clauses in the lease for errors etc?
If not then I'd stand my ground.
I'm pig headed so would probably tell them to come and collect the car.

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Assuming you’ve maybe got a couple of extras on the car like metallic paint,leather,etc which have taken it above 40K
If your paperwork says £38,750 then that’s their balls up though so I’d think you have a very strong case as they are shifting the goalposts after the deal has been done.
I’d not be taking that one on the chin and your point would be that you would never have agreed the deal at the increased price.

There is a get out clause in the contract, yes. That’s what they’re holding onto, but I’ve pointed out that the clause is intended for the annual increase in RFL of £10 or £15, not to excuse them from a massive error they made with the initial deal.

I suspect I’ll end up having to go the the financial ombudsman.

I have threatened them with “come and pick the car up and refund us three quarters of our initial down payment” but I’m not sure if this route would hurt us much more than it’d hurt them. I’m certain another new car will cost us a lot more than the remaining three years lease will cost us. It was quite a good deal in comparison to what it’d cost today.

Isn't what's on the paperwork the lease value to you? Tax is based on retail value (list price) which could well be different.

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Originally Posted by Kingstepper

Isn't what's on the paperwork the lease value to you? Tax is based on retail value (list price) which could well be different.

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Maybe so, but they should have told us before we took delivery and started the deal, if that’s the case.

They’ve moved the goalposts part way through a contract, and it’s not right.

I was chatting to my boss today who spends similar money on her car, and does 5000 miles a year. I was stunned, if me or my wife did that kind of mileage we’d be driving 10 year old second hand cars with minimal tax. 5000 miles a year it must be static 99% of the time?!? My boss scratched her head and agreed. It’s basically a home ornament.
I know we’re all different, just find it surprising - money spent on a car is spent on a hugely depreciating asset and if you barely use it what’s the point?

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Originally Posted by RobDad

I was chatting to my boss today who spends similar money on her car, and does 5000 miles a year. I was stunned, if me or my wife did that kind of mileage we’d be driving 10 year old second hand cars with minimal tax. 5000 miles a year it must be static 99% of the time?!?
I know we’re all different, just find it surprising - money spent on a car is spent on a hugely depreciating asset and if you barely use it what’s the point?

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Some people like driving a decent spec new car and are happy to pay for it.

Not all car drivers are the same.

Bit like watches. Half the enjoyment is in the ownership, even if it's sat on the drive or parked up in Metrobank.

I agree. And that’s one of the reasons the planets resources are stretched to the limit. People have to change ultimately, because the one certainty is that the resources are finite and will run out. I thought we had a bit longer but in my early 50’s I’m surprised how we seem to be blindly hurtling headlong into a Bladerunner future!

Not wanting to descend this thread into another argument over what’s right or wrong (cheers Rob) but for clarity, my wife will do about 8000 miles a year. It was cheaper to pay for 5000 and then pay the extra 11p per mile at the end.

Also for clarity, the cost of the lease over 4 years, will very probably cost us less than the likely depreciation if we’d bought the car SECOND HAND (let alone new) and runit for four years, then tried to sell it 3rd hand with 40,000 odd miles on the clock, at a time when EVs are becoming the norm and petrol engines are about to be banned.

Anyway, shall we get back on topic?

Apologies for derailing the thread OP, as you were!

Was this a case of the RRP increasing from the time you ordered to whenever delivery was? There were loads of price increases over the last two years with all the supply issues, I think my lease car actually had three increases between the time I ordered it and when it eventually turned up. Unfortunately the P11D price for VED is the price when it’s registered and not when it’s ordered.you would have hoped though the lease company would have kept an eye on this sort of thing though. I ordered my car with a spec to stay below the 40K so missed off a couple of things I’d have liked but by the time it arrived (was delayed nearly 6 months) the P11D price was over 43K :(

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Originally Posted by catflap

Was this a case of the RRP increasing from the time you ordered to whenever delivery was? There were loads of price increases over the last two years with all the supply issues, I think my lease car actually had three increases between the time I ordered it and when it eventually turned up. Unfortunately the P11D price for VED is the price when it’s registered and not when it’s ordered.you would have hoped though the lease company would have kept an eye on this sort of thing though. I ordered my car with a spec to stay below the 40K so missed off a couple of things I’d have liked but by the time it arrived (was delayed nearly 6 months) the P11D price was over 43K :(

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I think this is what happened, yes.

In your case, did the lease company inform you of the price rises and issue you a new contract with new prices? Or did they stick to their original contracted prices?

You must have also found that you’re now having to pay the higher RFL fee?

What is clear is that the extra tax has to be paid. As for who pays, is there anything in the small print in either of the contracts (lease company, car sourcer) that covers such an eventuality?

O/P, who is the funder in your case?

And with your document pack you would have signed for the contracted agreement and the P11D would be on that document.

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Originally Posted by Gareth-W

O/P, who is the funder in your case?

And with your document pack you would have signed for the contracted agreement and the P11D would be on that document.

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Lex, via UKCarline.

The P11D value on our signed agreement is £38,750, however they’re saying that value had increased to more than 40k before we took delivery of the car.

They never told us this. I doubt they even knew until I rang them about this issue.

Seems mad that they’re “allowed” to increase the price of a product a year after completing the sale. But they’re adamant that the clause in the contract which does indeed state that any annual increase in RFL can and will be passed on to me, covers them in this case.

I’m sure that the clause is there to cover the £10 or £20 annual increase, but this is a different thing altogether.


UKCarline have replied again today saying their decision is final and if we don’t like it to contact the financial ombudsman.

Pain in the ass!

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Originally Posted by mr noble

Lex, via UKCarline.

The P11D value on our signed agreement is £38,750, however they’re saying that value had increased to more than 40k before we took delivery of the car.

They never told us this. I doubt they even knew until I rang them about this issue.

Seems mad that they’re “allowed” to increase the price of a product a year after completing the sale. But they’re adamant that the clause in the contract which does indeed state that any annual increase in RFL can and will be passed on to me, covers them in this case.

I’m sure that the clause is there to cover the £10 or £20 annual increase, but this is a different thing altogether.


UKCarline have replied again today saying their decision is final and if we don’t like it to contact the financial ombudsman.

Pain in the ass!

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I see.

This is part of the problem in the industry (that I have a business in) that comes with the very long lead times that the sector has had for some time now. Some funders that used to "price protect" their terms once agreed can no longer do that when lead times are months into years away as so much changes in that time - not least manufacturer price increases and/or Government taxation/VED changes.

Car Line as the intermediary really cannot do much here so Lex (whom your ongoing financial contract is with) is where I'd recommend you focus..........or as you say just raise a complaint against Lex to the Financial Ombudsman, the FCA and also, maybe, the BVRLA too.

Thanks for the advice Gareth.

Lex have passed the buck back to UKCarline, saying that they only fund the deal and supply the car, they told me my issue is with UKC who provided the figures and did the contract with me. So my understanding was that it’s UKC I need to raise the complaint with the financial ombudsman with.

I still find it hard to fathom how they can think is ok and fair to increase the cost of the deal they set out but £1500 while saying they have no other option. It’s a disgrace really.

Must be happening a lot, as you say, due to the long lead times and increasing prices.

The fact is, if they’d told us the day before we took delivery of the car, that the price had gone up by £1500, we might very well have decided not to go ahead.

We weren’t given that choice.

To me, it’s pretty similar to the whole PPi scandal.

What about future increases in RFL, won't these be passed on?

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Originally Posted by mr noble

Thanks for the advice Gareth.

Lex have passed the buck back to UKCarline, saying that they only fund the deal and supply the car, they told me my issue is with UKC who provided the figures and did the contract with me. So my understanding was that it’s UKC I need to raise the complaint with the financial ombudsman with.

I still find it hard to fathom how they can think is ok and fair to increase the cost of the deal they set out but £1500 while saying they have no other option. It’s a disgrace really.

Must be happening a lot, as you say, due to the long lead times and increasing prices.

The fact is, if they’d told us the day before we took delivery of the car, that the price had gone up by £1500, we might very well have decided not to go ahead.

We weren’t given that choice.

To me, it’s pretty similar to the whole PPi scandal.

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This is a classic case of both parties blaming each other with you, unfortunately, stuck in the middle.

I would want to know who (Lex or UK Car Line) discovered the P11D variance and when. One of them is to blame for not communicating the increase so that is what you or the ombudsman will need to establish. The actual root cause of the increase is, most likely, from the manufacturer themselves but it is the job of the funder (primarily) to advise of this change in cost and/or the intermediary (secondary) to do likewise.

To be fair it’s nothing like PPI at all so I wouldn’t waste any negative energy on that.

And you will still be liable for any subsequent changes (from the government) to VED and that will be in your terms and conditions for the agreement.

(to answer the question from “Kingstepper”)

Thanks again, Gareth.

We will indeed now be charged at least £498 each year for the next 3. (It’s a 4 year lease)

So we’re looking at a £1500 increase in the total amount payable.

I can’t really imagine the ombudsman NOT siding with us, the customer, in this case, so I will have to get on with filling out all the forms to raise a claim.

Hopefully I can put both companies down on the one claim and let the ombudsman do the work to find out which of them is at fault.

Really don’t have the time for it. :bull_head:

I’m not so sure that you have a cast iron case but I’m no expert.

You signed the paperwork n a car with a sub £40k value so it fell into the lower VED band, which was correct at the time.

Due to delays and price increases, it fell into the higher (government imposed) VED bracket. The higher VED is therefore due on the car.

It’s an unfortunate set of circumstances, which haven’t really occurred in the past. The question is who should be held responsible for not knowing or anticipating this situation. That really isn’t clear.

The only known fact is that you are enjoying the use of a car which sits in the higher VED band and, as you are the one benefiting from that, you should be the one to pay for it.

As I said earlier, I’m no expert and it’s just an alternative viewpoint which the ombudsman may or may not see.

On another note, is it an extra £500 a year or £500 a year total which would be an extra £350 a year?

The higher rate band is an extra £355 a year (2022/3)

Annoyingly (very freaking annoyingly) because the RFL charge becomes a “sale” when Lex pass it onto me, I have to pay VAT on top. Which seems even more unfair.

If Lex or UKC had realised their error the day before I took delivery of the car, then we wouldn’t have to pay the VAT, so at the very least, one of the companies has to be liable to pay that part of it as I should have been told prior to delivery.

I think that’s the crux of it…..I wasn’t informed of the increased cost until 12 months after the sale agreement had started.

Also very annoyingly, I think the new P11D value is £40,050. It seems massively bonkers that the government levies an addition RFL fee on the car, totalling £1500 (£1100 if paid without the VAT as normal) because it cost £51 more than the threshold.

Surely someone with an ounce of nonce at Seat/Cupra, could have looked at that and thought, “If we knock 51 quid off the cost of the paint, it’ll save the customer £1100 and make us likely to flog a load more cars.”


Totally crap situation in many ways.

What annoys me most about this is that it is supposedly a luxury car tax but due to the price increases more and more 'normal' cars are costing over £40k. I ordered a Skoda Kodiaq last year that would have attracted the higher rate, I later cancelled the order for unrelated reasons.

The threshold for this extra tax should increase by the same level as inflation every year, but that's a different discussion.

I hope the op gets this resolved to their satisfaction with the leasing company.

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Originally Posted by Craig

What annoys me most about this is that it is supposedly a luxury car tax but due to the price increases more and more 'normal' cars are costing over £40k. I ordered a Skoda Kodiaq last year that would have attracted the higher rate, I later cancelled the order for unrelated reasons.

The threshold for this extra tax should increase by the same level as inflation every year, but that's a different discussion.

I hope the op gets this resolved to their satisfaction with the leasing company.

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Haven’t car prices increased by more than inflation?

One of the worst taxes ever “expensive car Tax” and has never budged with inflation and not paid by MPs being chauffeured in Range Rovers

Anyway I digress

Right having once run a rental company with BVRLA accreditation they were pretty good at resolving any disputes, your leasing company are a member so I think it’s worth a call to BVRLA who will probably be as surprised as most here are and membership is mandatory to be an agent of big leasing companies

Lex will not give a stuff

Options

Leasing co pay
Terminate lease without penalty as contract void
Shorten term by consent

On a separate note when charging RFL it was never permitted to add tax to a tax so I find that very odd indeed ?


Road tax is exempt from VAT in the UK. The reason for this is because Vehicle Excise Duty is considered a form of direct taxation on vehicle ownership rather than a value-added tax on goods or services.

I dont think RFL is a tax, therefore fair game. Like ‘duty’ on fuel.

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Originally Posted by blackal

I dont think RFL is a tax, therefore fair game. Like ‘duty’ on fuel.

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VED is most certainly treated as a tax. The question is, would it still be considered a tax when being recharged to the end customer.

So far as I'm aware, if you recharge a VAT exempt cost then it remains VAT exempt, but I could be wrong (as it would seem to be an unlikely error).

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Originally Posted by learningtofly

VED is most certainly treated as a tax. The question is, would it still be considered a tax when being recharged to the end customer.

So far as I'm aware, if you recharge a VAT exempt cost then it remains VAT exempt, but I could be wrong (as it would seem to be an unlikely error).

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Except - that is how you can get vat added to fuel duty- because it is not a tax.

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Originally Posted by blackal

Except - that is how you can get vat added to fuel duty- because it is not a tax.

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nope RFL is treated as a direct 'tax' and as such VAT exempt , fuel treatment is a red herring and not comparable.

when buying a new car the order form / invoice will have the basic price then add accessories then add VAT to that to get a total for the vehicle then the 'RFL' will be added after that VAT inclusive total to get final price.

Similarly if you tax your vehicle online or in Post Office its not £ 100 RFL + £ 20 VAT its £ 100 total with no VAT element.

I do not think charging Mr Noble VAT on top of the 'Expensive Car Tax' is correct

however happy to be proven wrong.

just to add the RFL has gone up on my wee Abarth and ALD have charged me exactly the £ 25.00 the RFL has gone up.

Ah-hah! Thanks.

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Originally Posted by blackal

Except - that is how you can get vat added to fuel duty- because it is not a tax.

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What? read what I said again - you're wrong.

I queried the VAT with Lex in an email and as usual they respond with a phone call (so there’s no paper trail I’m guessing) and explained that once the unpaid RFL is passed from them to me, it becomes a sale and is therefore subject to UK sales tax. Apparently no way around that.

But again, if UK Carline had checked the P11D value at the time they supplied me with the car, they’d have seen it had fallen into the higher car tax bracket and adjusted our monthly payments accordingly. Saving us the VAT element at least.

Thanks for the tip about the BVRLA. Those people were mentioned in their final response along with the financial ombudsman as bodies I can go to if I’m still not happy with their final response.

I’ll get on with that tomorrow.

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Originally Posted by mr noble

I queried the VAT with Lex in an email and as usual they respond with a phone call (so there’s no paper trail I’m guessing) and explained that once the unpaid RFL is passed from them to me, it becomes a sale and is therefore subject to UK sales tax. Apparently no way around that.

But again, if UK Carline had checked the P11D value at the time they supplied me with the car, they’d have seen it had fallen into the higher car tax bracket and adjusted our monthly payments accordingly. Saving us the VAT element at least.

Thanks for the tip about the BVRLA. Those people were mentioned in their final response along with the financial ombudsman as bodies I can go to if I’m still not happy with their final response.

I’ll get on with that tomorrow.

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It cannot be subject to VAT if there is no value added...
They are cashing the RFL on behalf of the government (or getting you to refund them). What they are calling VAT is what they want to charge you for the privilege. plus VAT on the latter, of course :icon_biggrin:

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Originally Posted by learningtofly

What? read what I said again - you're wrong.

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I acknowledged that above, just not to you personally...............

I was wrong

Just worked out that if we do end up having to pay £498 this year and the same or slightly more next year and the year after, that’d represent just under a 15% increase in our total cost per year. (For years 2/3&4)



So it’s not an insignificant issue at all.

Seeing as there are a couple of knowledgable folk on this thread now, here’s a copy of the lease agreement. We had nothing after this that had any mention of the increased P11D value, until two weeks ago. We took delivery in May 2022, so it was a 6-7 month wait from this original agreement being signed.

https://uploads.tapatalk-cdn.com/202...e14d674333.jpg

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Originally Posted by mr noble

Seeing as there are a couple of knowledgable folk on this thread now, here’s a copy of the lease agreement. We had nothing after this that had any mention of the increased P11D value, until two weeks ago. We took delivery in May 2022, so it was a 6-7 month wait from this original agreement being signed.

https://uploads.tapatalk-cdn.com/202...e14d674333.jpg

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That is the pre-contract information sheet (not a signed finance agreement with the funder) from the intermediary and the P11D value isn’t on there.

You would have the actual finance document pack sent out for signature a few weeks before delivery on Lex branded paperwork (or an E-sign document pack) that would have the P11D value for May ‘22…

Or have I misunderstood your point here please?

The 17 page signed agreement from Lex does not have a P11D value on it, anywhere. I’ve read through it twice over the last couple of weeks and my wife has too. Lots and lots of Ts & Cs and the basic figures for our lease agreement, but defo no P11D value.

The only reference to the value is on the UKC doc above.



I filled out the complaints form on the BVRLA website this morning, so will now wait to hear what they think.

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Originally Posted by mr noble

The 17 page signed agreement from Lex does not have a P11D value on it, anywhere. I’ve read through it twice over the last couple of weeks and my wife has too. Lots and lots of Ts & Cs and the basic figures for our lease agreement, but defo no P11D value.

The only reference to the value is on the UKC doc above.



I filled out the complaints form on the BVRLA website this morning, so will now wait to hear what they think.

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Been following this and I have to say that the lack of supply of cars seems to be crippling many aspects of the industry... Not least a complete lack of ability to properly manage leases properly.

Seems like a game of Russian roulette!! Order a car and hope that the car, any options or the legislation around cars doesn't change in the meantime.

Hope you get some resolution!! The vat on the road tax would have me going bonkers!!

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