In The Current Climate Delaying A Decision Could Be Very Costly

Friday, 23. January 2009

At the end of 2008 we were inundated with great deals and offers as manufacturers looked at ways to clear their overstock of cars but since the start of the new year we haven’t had anywhere near the same number of deals or the great value that we saw previously. Part of the reason is the continued weakness of the used car market whereby even if the manufacturers were giving as much away in bonuses and discounts now as they did last year the drop in expected resale values made the rentals more expensive but for those waiting for deals to return there is another problem looming on the horizon and that is the change to capital allowances that comes into effect in the new tax year. It means that in the books of the leasing companies where they would normally claim a balance allowance when the car was disposed of the car continues to attract allowances, for tax purposes, on a depreciating balance as part of a pool long after the car has been disposed of. One accountancy firm has estimated that some cars could take 43 years to receive full tax relief. This will have an adverse affect on the calculations that generate lease rates leading to what could be a sudden increase. So again I must say that if you are looking to change your car this year and are thinking of leasing if you see a car at a great rate and you are in a position to change you should act immediately, there are many that waited in December for the deals to get better in January only to be deeply disappointed! By Graham Hill