Motoring News

What's the Latest on the Scrappage Scheme?

Sat, 17 Oct 2009 14:16

Last updated 2-11-2009. See below for full BIS rules.

Save a 'Classic' from the crusher by registering details at: SAVE IT FROM SCRAPPAGE

The UK's car scrappage scheme is to be extended, Lord Mandelson has announced.

At the Labour Party Conference on 28th September 2009, Business Secretary Lord Mandleson announced that the scrappage scheme was to be extended.

Lord Mandleson said the scheme, which started in May and gives consumers £2,000 off a new car if they trade in one at least 10 years old, was running out of money.

He said "we cannot do everything but that does not mean doing nothing" and said the scheme would be extended to cover 100,000 more cars and vans.

The £300m initiative had been due to end in February, or when the limit of 300,000 vehicles being scrapped was reached.

By 27th September 2009, 227,750 orders had been placed through the scheme - which at a cost to the government of £1,000 per car means £227m has been spent. The extension means a total £400m will have been committed to the scheme, which will still end in February at the latest.

Other modifications to the scheme will see the age qualification changed by six months to any car registered before 29 February 2000, and cut the minimum age of vans being scrapped from 10 years to eight years, so vans registered up to 29-2-2002 will be eligible for scrappage.

Of course, on any car sold for mote than £7,500, the Treasury gets back more than its £1,000 contribution in VAT, and this will increase from 1st January 2010, so the Government is not actually giveing anyhting away. It is making a net rake-off on VAT on sales that would not otherwise have taken place.

The scheme started on 18th May 2009.

The government offering is £1,000 to be matched by participating vehicle manufacturers when scrapping a MOT’d car first registered on or before 31st August 1999 and which they have owned for at least one year. This only applies when customers buy new cars and light vans and by the end of August 2009 the number had reached 185,273.

SMMT chief executive Paul Everitt said, “This is good news for consumers and will get people back into showrooms, kick-starting demand in the market.”

Honest John said, on Sky News on 6-9-2009, "There are already signs that scrappage is running out of steam as private buyers worry their order cannot be completed before the scheme runs out of money. To keep the ball rolling, the present scheme for cars 10 years old needs to be extended to the end of the year. Then, when VAT goes back to 17.5% on 1st January, they need to renew the scheme for cars a year younger. The government takes more than it makes anyway. It gets £1,008 in VAT at 15% on a £7,500 car, plus a £55 first registration fee. It wouldn't get that VAT without scrappage because private sales at that price level will simply dry up."

(At 17.5% VAT, a £7,500 car would go up to £7,663, with £1,141 in VAT for the government's investment of £1,000.)

In Germany the scheme was €2,500 from the German Government, backed by as much as €2,500 from the manufacturers. £5,000 off a new car is a lot more than £2,000 off, even though transaction prices for cars in Germany generally are a lot higher than in the UK once German Euros are converted to Pounds Sterling.

In the USA, carbuyers got $4,500 'cash for clunkers' in a scheme that ran out of money by the end of August 2009.

Make sure you fully understand exactly what each manufacturer is actually offering in their Scrappage deals, and where the bottom line actually is.

And if you are taking out finance to pay for the car, don’t do it unless the scheme offers redundancy insurance to protect you if you lose your job. (Renault, Nissan, Volvo and Honda were the first with this.)

Scrappage scheme: the facts

* In his Budget statement to the House of Commons on 22 April 2009, Chancellor of the Exchequer Alistair Darling confirmed that a scrappage incentive scheme will be introduced.
* A total of £2,000 will be offered in a “cash-for-scrap” scheme for 10-year-old, or older, cars.
* The £2,000 saving will be made up of £1,000 from the government and £1,000 from the relevant car manufacturer.
* Participation in the scrappage scheme by specific car manufacturers is voluntary.
* The funding will be made up of £300million from the government (later increased to £400million) – a figure that will be matched by manufacturers participating in the scheme.
* The scheme was introduced on 18th May 2010.
* The scheme will run until the start of March 2010, or until all of the government funding has been used.
* The discount will be offered to consumers buying a new vehicle to replace a vehicle which they have owned for more than twelve months.
* The registered keeper must have a UK address.
* Eligible vehicles must have been first registered in the UK on or before 31 August 1999 and have a current MOT test certificate (or an MoT that has expired within 14 days of the deal being done). They must also be taxed and insured. You can apply for a refund of vehicle tax if you are the current registered keeper or were the last registered keeper of your vehicle. (You'll also need to tell the Driver and Vehicle Licensing Agency (DVLA) why the vehicle no longer needs the tax disc.) To get a VED refund you’ll need to complete a V14 ‘Application for a refund of vehicle tax’. Send the form and the tax disc to Refund Section, DVLA, Swansea SA99 1AL.
* Scrappage savings apply to commercial vans (up to 3.5 tonnes) as well as cars.
* The scheme is audited by the DVLA.

* Scrappage trade-ins can only be made against new cars.

* The new car must be delivered within 16 weeks of the date of order.

* The dealer has only 15 days from registration of the new car to obtain a certificate of destruction for the old car, get it back to the manufacturer, for the manufacturert to get it to the DVLA and for the DVLA to get it to ther Treasury, otherwise he loses the £1,000 he has already given the customer.

* There is evidence that some of the better scrappage cars are being exported intact to Eastern Europe and Africa.

Capital Allowances doubled – Incentive for business

The doubling of the first year capital allowance to 40 per cent for replacement vehicles under the scrappage scheme is an incentive for business to make capital investment. This will be welcomed by commercial vehicle dealers who have been hard hit by the recession and have seen sales fall by nearly 50 per cent.

Citroen is going ahead with its own scheme anyway, offering buyers a £2,000 scrappage allowance on everything whatever the government adds. Citroen was effectively doing this anyway for years with its minimum part exchange scheme.

Nissan is offering its own scrappage p/x allowance for cars up to 8 years old.

George Bull, Head of Tax at accountancy firm Baker Tilly, commented on Tax and the scrappage scheme (added 22-5-2009):

1. Tax and the scrappage scheme

1.1 The Manufacturer
BERR pays the manufacturer £1,000 which in turn pays that sum to the dealer who must ensure that the customer receives the benefit of the sum.

The manufacturer provides the other £1,000 and, although the customer doesn’t actually see the money, it is treated for VAT purposes as if the manufacturer had given a “cash-back” payment to the customer. Consequently, although the manufacturer must still charge VAT on the normal sales price to the dealer, it is entitled to reduce its output tax by £130.43 to reflect the VAT inclusive element of the manufacturer's £1,000 contribution. Its contribution to the scheme is therefore £870 rather than £1,000.

For corporation tax purposes the cost to the manufacturer is the discount of £1,000 plus corporation tax on BERR ‘s net contribution which, at the 28% full rate that will generally apply (once losses have been used up, so not necessarily for this year) is £243.60.

1.2 The Dealer
The dealer’s situation is not much easier to follow. It will be invoiced at the normal sales price by the manufacturer and so is entitled to deduct the same amount of input tax, irrespective of whether the customer has a car to scrap. When it comes to sell the car, it will need to pay VAT to HMRC on:

* the amount it receives from the customer;
* the £1,000 discount from the manufacturer; and
* the £1,000 BERR subsidy.

Consequently, the dealer will pay the same amount of VAT on the sale of the car as it would do if it sold the car outside the scheme. The position of the dealer cannot be said to be “VAT neutral”, as it is not entitled to deduct any VAT on the BERR grant but must pay VAT on the full sales price to the customer.

1.3 The buyer
The buyer’s net price is reduced by £2,000 but that reduction does not feed through as part of the cost for all tax purposes. There are three aspects to this.

First, VAT.

For VAT, if the buyer is entitled to reclaim VAT it must reduce the amount of input tax it recovers. Broadly, this applies to:

* vehicles that are not classed as cars, principally light commercial vehicles and vans; and
* cars used for businesses such as taxi and private hire, where the owner is VAT registered and entitled to reclaim the input VAT.

These businesses must reduce their input tax claims by the VAT on the manufacturer’s discount element (£130.43).

Second, capital allowances.

For capital allowances purposes the purchase price of the vehicle will be the net cost after deducting the subsidy and discount and making any further VAT adjustments relating to the manufacturer’s discount element (non-recoverability of VAT would push the cost back up).

As far as the scrapped vehicle is concerned, it is treated as having no trade-in or disposal value at all. This may provide a balancing allowance where the car is held in a single asset pool because it originally cost more than £12,000.

Finally, employee benefits.

Employees’ benefits in kind are unaffected by the scrappage scheme because their benefits are based on list prices which are different from the price actually charged. If the manufacturer alters the list price of the car it cannot treat the alteration to the list price as a scrappage discount.

More at www.bgate.co.uk

INSTRUCTIONS FROM HMR&C HOW TO TREAT VAT ON CARS SOLD UNDER THE SCRAPPAGE SCHEME

If you are a dealer participating in the Scheme the cost of the new vehicle received by you is unaffected, and you should make no adjustments to the VAT you pay to the manufacturer, or claim from HMRC as input tax. As explained, the manufacturer is not providing a £1,000 (or greater) discount to you as part of the Scheme – they are providing it to your customer. Your selling price for the vehicle has not changed and you must not reduce your output tax. Whatever your final VAT-inclusive ( 'On The Road ') selling price of the new vehicle is, under the Scheme your customer pays £2,000 less, with the balance of the consideration being made up of the two £1,000 subsidies. Under the Scheme, it is important that it is clear to your customer that they are paying £2,000 less than would otherwise be the case.

FULL BIS RULES FOR SCRAPPAGE (last updated 11-8-2009):

Vehicle Scrappage Scheme: Frequently Asked Questions (FAQs)

BIS will continue to update and add to these FAQS where it becomes clear further information would be helpful. Direct link to latest information from BIS:

LATEST INFORMATION

(http://www.berr.gov.uk/whatwedo/sectors/automotive/scrappage/FAQs/page51710.html)

DOCUMENTS

What documents will I need?

For the Scrappage Scheme, you will need your:

V5C Vehicle Registration (Log Book)
MOT Test Certificate
Tax Disc
Insurance
Photo ID

If you have lost any of these documents or the information in them is not up-to-date you will need to get a replacement showing the correct details.

The dealer may require further documentation if, for example, you also require a finance deal to purchase the new vehicle.

What documents should the dealer keep?

The dealer should retain the V5C and the MOT Test Certificate when the old vehicle is handed to the dealer for scrapping. (If the old vehicle is to be collected from your house by the Authorised Treatment Facility scrapping the vehicle, the dealer should take a copy of the V5C and the MOT Test Certificate). When you do this, you should complete Section 9 of the V5C and return it to the DVLA. The dealer may wish to take copies of the other documents.

What photo ID do I need to provide?

For the purposes of the scrappage scheme, the dealer needs to satisfy themselves that the person is who they say and is the registered keeper of the old vehicle. A photo driving licence or a Passport is likely to be the most convenient forms of ID to use for this purpose. The dealer may require a certain type of ID if, for example, you also require a finance deal to purchase the new vehicle.

THE OLD VEHICLE

PASSENGER CAR OR SMALL VAN NOT EXCEEDING 3.5 TONNES

Does the scheme only apply to cars?

No. Cars and vans not exceeding 3.5 tonnes are eligible (vehicle categories M1 and N1 respectively).

What about my Reliant Robin, motor home or motorcycle?

No, only cars and light vans qualify.

Are electric vehicles included under the terms of the scheme?

Yes, providing the vehicle is a car or light van.

Can you trade an old car for a new van?

Yes. There is no restriction on a car being traded in to get a discount for a van or vice versa.

Is there a limit to the number of cars/vans that a business or individual can scrap as part of the scheme?

No, there is no limit to the number of times a business or individual can take advantage of the scheme. However, only one scrappage subsidy can be given per new vehicle, regardless of how many old vehicles are traded in each time.

REGISTERED IN THE UK ON OR BEFORE 31 AUGUST 1999

How do I know whether my car was registered before 31 August 1999?

The date of first registration in the UK is shown in section 4 (B1) of the vehicle’s registration certificate (V5C).

My car was manufactured before 31 August 1999 – is it eligible?

No. The vehicle must have been registered in the UK on or before 31 August 1999.

Will the age criterion for the trade-in vehicle change?

No, it will remain the same for the duration of the scheme - vehicles registered in the UK on or before 31 August 1999.

My car was imported or is a left-hand drive model – is it eligible?

If the car was registered in the UK on or before 31 August 1999 then it is eligible, provided all the other conditions of the scheme are met.

My car is registered in this country, I went to another country and then came back to UK, is it valid?

If the car was registered in the UK on or before 31 August 1999 and is registered in the UK now, then it is eligible, provided all the other conditions of the scheme are met.

Are vehicles registered in Northern Ireland eligible?

Vehicles registered in Northern Ireland are UK registered vehicles and qualify for the scrappage scheme, provided all the other conditions of the scheme are met.

My vehicle was registered in Northern Ireland and subsequently re-registered in Great Britain

For vehicles originally registered in Northern Ireland which are subsequently re-registered in Great Britain (GB) it may not be apparent from the V5C how long the vehicle has been registered in the UK, as the DVLA record only relates to the period of registration in GB. The dealer will need to satisfy themselves that the vehicle meets the rules of the schemes by contacting the DVA to confirm the date of first registration. Dealers should use the dedicated enquiry line (0906 5161666 – calls charged at £1.50 per minute) or email the DVA at dvlni@doeni.gov.uk. The public should use the DVA’s general enquiry line on 0845 4024000.

Are vehicles registered in the Channel Islands or the Isle of Man eligible?

No. The Channel Islands and Isle of Man are not covered by the scheme.

The vehicle has been registered to the British Armed Forces prior to the August 1999 eligibility and re-registered as a private vehicle in the UK after the August 1999 – Is it eligible for the scheme?

The BIS Scrappage Team will check the registration with MOD. Please send an email headed “MOD Registration” to scrappage@bis.gsi.gov.uk and supply details of the Make, Model, Colour, Vehicle Registration Number and Vehicle Chassis Number as shown in the V5C.

REGISTERED WITH THE DRIVER AND VEHICLE LICENSING AGENCY (DVLA) OR DRIVER VEHICLE AGENCY (DVA) IN YOUR NAME

I have a V5 log book - do I need a new style V5C?

Yes, you do. The old style log book has been invalid since 1 July 2005.

Are vehicles registered to businesses eligible?

There is no distinction between commercial or private buyers. Car dealers and vehicle manufacturers are not eligible.

The name on my V5C vehicle registration certificate has an incorrect initial, a typing error. Must I get a new V5C before I can collect my new car?

No, if it is only a minor error and you can provide supplementary ID such as a photocard driving licence, gas or electricity bill, or council tax bill, which will satisfy the dealer that you are who you say you are, and that your address is correct then there is no need to get a replacement V5C.If the dealer is any doubt, they will ask you to correct the relevant documentation.

I married within the last 12 months, does the fact I changed my name on the V5C document mean that I do not qualify?

No. The V5C document should only show a change of name, but not a change of keeper, and so is still valid under the terms of the scheme.

I’ve got married, divorced or changed name by deed poll recently and changed my name but haven’t changed my name on the V5C?

You must ensure that all information on the registration certificate (V5C) is correct and up-to-date and will need to apply to DVLA for a replacement showing the correct details. DVLA aims to deliver a V5C to you within four weeks of receiving your application.

I am married but continue to use my maiden name?

The old and new vehicles will need to be registered in the same name.

What do I do with the old V5C registration certificate?

When you trade in your old vehicle you should complete part 9 of the V5C and return it to DVLA to notify them that you are no longer responsible for the vehicle. The dealer will then keep a copy of the V5C. The original of the V5C goes with your car to the Authorised Treatment Facility where it will be scrapped.

REGISTERED TO THE CUSTOMER CONTINUOUSLY FOR 12 CALENDAR MONTHS BEFORE THE ORDER DATE OF THE NEW VEHICLE

What happens if the scrappage vehicle has been in the same family, at the same address for over 1 year but the registered keeper has changed from parent to child or husband to wife or vice versa, within the last 12 months?

If the name of the registered keeper has changed in the last 12 months then the old vehicle would not be eligible under the scheme.

What happens if the vehicle to be scrapped is registered in my spouse/civil partner’s name and they have died?

Where a bereaved spouse or civil partner shares the same address as the person who was the former keeper of the car, the requirement that the old vehicle must have been registered to the keeper continuously for 12 months before the order date of the new vehicle will be cut to 6 months (on a rolling basis).

In addition to complying with other rules of the scheme, the bereaved would need to produce an original or certified copy of their marriage certificate or certificate of civil partnership and of their spouse/civil partner’s death certificate for the dealer to verify and copy.

The date of 6 months would be on a rolling basis so that a bereaved spouse who re-registered the car in their name in January 2009 should qualify in July 2009 and in February in August and so on.

If you are in the situation covered by this change, you should check with your dealer whether the relevant manufacturer is participating in the scrappage scheme and has now agreed to this change.

UK ADDRESS ON THE V5C REGISTRATION CERTIFICATE

Does the UK address on the old and new registration certificates need to be the same?

Yes. The new vehicle must be registered at the same UK address as that at which the old vehicle was registered.

I've moved recently but haven't changed the address on the registration certificate?

CURRENT MOT TEST CERTIFICATE

Are cars with MOT test certificates which have recently expired eligible for the scheme?

Yes, provided the MOT certificate has expired no more than 14 days from the order date of the new vehicle. In such cases, you will need to make arrangements with the dealer for the collection of the old vehicle (as it could not be driven on the public highway). The dealer will also need to satisfy themselves that the paperwork and the vehicle match, and are in order.

Why do I need an MOT if the car will be scrapped?

One of aims of the scheme is to get old cars off the road. If your car does not have an MOT it is already off the road and is therefore not eligible.

Are MOT exempt vehicles eligible?

No. Vehicles must have a current MOT Test Certificate (or expired within 14 days of the order being placed). The only exceptions are for Hackney Carriages and vehicles used on certain offshore islands (see below).

My old vehicle is a licensed taxi and is exempt from MOT testing?

The dealer will ask you to provide documentation issued by licensing authorities who are authorised to certify a Hackney Carriage vehicle’s roadworthiness in lieu of a MOT certificate.

What happens if my old vehicle is only used on an offshore island and is exempt from MOT testing?

Vehicles do not need an MOT if they are only used on GB islands that have no road connection to the mainland. This exemption does not apply to cars used on the Isle of Wight, the islands of Arran, Bute, Great Cumbrae, Islay, Lewis, Mainland (Orkney), Mainland (Shetland), Mull, North Uist and Skye; and light commercial vans used on the Isle of Wight, the Islands of Lewis, Mainland (Orkney), Mainland (Shetland) and Skye.

Vehicles that fall within this exemption will be eligible for the scrappage scheme, providing the address of the registered keeper shown on the V5C is within an exempt area, the registered keeper has made a declaration that the vehicle is MOT exempt and is taxed and insured. As the vehicle cannot be legally driven outside the island, arrangements may need to be made to transport the car to the dealer so they can satisfy themselves that the paperwork and the vehicle match are in order.

TAXED AND INSURED

Does the tax disc (VED) have to be valid when the order for the new vehicle is placed?

The vehicle tax requirement, like the MOT requirement relates to the date you order your new vehicle, not the date of delivery. Your old car is still eligible for the scheme if it has a current MOT, or the MOT for your old car has expired within 14 days of the order. Similarly, it must have a valid tax disc or one that has expired within 14 days of the order.

If you are retaining your old vehicle, you must SORN your vehicle, or buy a new tax disc within 14 days of the tax disc running out or you will be committing an offence. Also, if you have neither a MOT or road tax you cannot legally use or park the vehicle on the public road and you will need to make arrangements with the dealer for the vehicle to be collected.

Does the dealer need to keep the tax disc when I trade in my old vehicle?

No, the tax disc should be returned to you so that you can claim a refund if appropriate. To get a refund you’ll need to complete a V14 ‘Application for a refund of vehicle tax’. Send the form and the tax disc to Refund Section, DVLA, Swansea SA99 1AL.

There is no need for the dealer to retain your tax disc. It is not a requirement of the scrappage scheme. The dealer may wish to keep a copy.

WRITE-OFF

My car is a write-off; does it still qualify for the scheme?

Category A & B write-offs are not eligible.

Category D write-offs are eligible, provided it meets the registration, tax, insurance and MOT criteria.

Category C write-offs before April 2003 are eligible, provided it meets the registration, tax, insurance and MOT criteria.

What happens if my car is a Category C write-off after April 2003?

For cars designated category C write-offs after April 2003, if the car has a Vehicle Identity Check (VIC) marker on it, it will need to pass a VIC test, and have a replacement V5C issued, before it can be eligible for the scheme.

The Dealer will need to contact VOSA (Vehicle and Operator Services Agency) on 0300 123 9000 to find out whether there is a VIC marker on the car. If there is, then you will need to arrange to have VIC test carried out on the car. This can be done at one of VOSA’s 57 VIC testing stations nationwide. The charge for the test is £41 or £50 if the test is carried out, out-of-hours.

If the vehicle passes the test, a VIC Pass Certificate (VIC20) will be issued. You should then apply to DVLA for a replacement V5C using a V62 application form. All V5Cs issued following a VIC pass are annotated “Accident damaged and/or substantially repaired; identity checked on dd/mm/yyyy”

The VIC scheme only applies to vehicles in vehicle category M1.

What happens if my car is a Category C write-off after April 2003 but a VIC marker has not been set?

The dealer will need to check with VOSA that a VIC Marker has not been set. If the dealer is satisfied that there is no VIC Marker, the vehicle is eligible providing all the other criteria of the scheme are met.

How can I check the write-off category of my vehicle?

You will need to use a commercial vehicle check company such as Experian; HPI; Carweb and CDL Vehicle Information Services. These companies obtain vehicle information from a variety of different sources and charge for their services. DVLA is unable to provide any information on the write-off category of a vehicle.

STATUTORY OFF ROAD NOTIFICATION (SORN)

My vehicle has been declared SORN, is it eligible?

No, one of aims of the scheme is to get old cars off the road. If a SORN has been made then the vehicle, by definition, is already off the road, and is not therefore eligible.

My vehicle has been declared SORN, can I still qualify?

Yes, you have the option of getting it taxed, MOT’d and insured in order to qualify.

I have to wait 2 months for my new car, and the MOT on my old car expires next week, should I get a SORN while I wait for my new car?

Once you have ordered your car, you should SORN your vehicle if it is going to be more than 14 days between the expiry of the MOT and the delivery of the new vehicle or buy a new tax disc. Once you make a SORN you must keep your vehicle off the public road as you will be committing an offence if it is used or parked on the public road. You will need to make arrangements with the dealer for your old car to be collected once the new one is delivered.

If I keep my old car off the road without a SORN, who will pay if I am fined?

While you remain the registered keeper of the vehicle you are responsible for any fines.

CHERISHED NUMBER PLATES

What do I do if I have a cherished number plate?

You should not sell or otherwise dispose of a vehicle until the cherished registration number has been transferred to another vehicle, or placed on retention, and a replacement V5C has been received. If you dispose of your vehicle prior to this, entitlement to display the registration number will be lost.

THE SCRAPPED VEHICLE

Can I scrap my old vehicle before ordering a new vehicle from the dealer?

No. The old vehicle must be disposed of by the dealer

Can I scrap my old vehicle after ordering a new vehicle from the dealer?

No. The old vehicle must be disposed of by the dealer

Should the scrapped vehicle be shown as a part exchange on the invoice?

The scrapped vehicle should have no financial value and does not need to be shown on the invoice.

Do I need to wait until my new vehicle is delivered before scrapping the old vehicle?

No. The old vehicle can be scrapped at anytime after the order is placed. However, should you decide to cancel your order for the new vehicle after the old vehicle has been scrapped and a Certificate of Destruction issued you will no longer have a vehicle eligible for the scrappage scheme to trade in with another dealer.

What happens if my car is involved in an accident and written-off after I have placed my order for the new car?

Providing all the criteria of the Scrappage Scheme were met when the Order was placed, including that the old vehicle was MOT'd, taxed and insured and not a total write off, the transaction can proceed and the vehicle will remain eligible. You will need to notify your insurer in the normal way but will need to retain possession of both the vehicle and the V5C. The dealer will need to have satisfied themselves that the old vehicle qualified at the time of the order and was written-off after the Order was placed. The dealer will need to arrange for it to be scrapped by an Authorised Treatment Facility and a Certificate of Destruction issued.

What happens if my car is stolen and recovered burnt-out after I have placed my order for a new car?

Providing all the criteria of the Scrappage Scheme were met when the Order was placed, including that the old vehicle was MOT'd, taxed and insured and not a total write off, and where the burnt out car can be shown to be the same as that offered at the time of Order and is now physically present to be scrapped, the transaction can proceed and the vehicle will remain eligible.

The dealer will need to satisfy themselves that the recovered vehicle is one and the same as that offered at the time of order and in the log book ie doing a physical check of the chassis number. The dealer will also require a copy of the Police Crime Number to confirm that the vehicle was stolen after the Order was placed. The dealer will need to arrange for the old vehicle to be scrapped by an Authorised Treatment Facility and a Certificate of Destruction issued.

What happens if my car is stolen and not recovered?

You will not be able to proceed as you need to be in possession of the old vehicle for it to be traded-in with the dealer and then scrapped and a Certificate of Destruction issued.

Can I remove anything from the vehicle before it is scrapped?

Only personal accessories can be removed. Vehicles have to be complete, including tyres and battery (and no additional waste added).

I'm a scrap dealer, can I be registered to receive scrap cars?

You need to be licensed as an Authorised Treatment Facility (ATF) by the environment agencies in order to treat End of Life Vehicles (ELVs). If you are already an ATF, there is no need to register separately.

NEW VEHICLE

Are there any restrictions on what consumers can buy?

The new vehicle must be a brand new UK-specification vehicle only ie not previously registered and/or grey import, but can include left-hand drive vehicles that meet UK specifications. There are no models of car or van excluded from the scheme as long as they are below 3.5 tonnes, and supplied by a manufacturer participating in the scheme.

Can manufacturers/dealers decide which cars are exempt from the scheme?

No they cannot exclude models. There is nothing to stop them from providing additional incentives for models they particularly want to sell.

Is there any limit on how long a motorist has to own the new car after they’ve traded their old one in?

No, there is no limit.

Are their restrictions on the time allowed from ordering the vehicle to taking delivery?

Yes, the new vehicle has to be delivered within four months of the order being placed. This is because the scheme is time limited with a fixed budget. Dealers will let you know if the required vehicle cannot be delivered within this timeframe and discuss alternatives with you.

From what price should the £2000 scrappage incentive be deducted?

The £2000 should be taken off the “On the Road Price”, that is the full price of the vehicle including factory fitted extras, number plates, vehicle excise duty, registration fee, published delivery charge and VAT. This should be shown on the customer invoice “below the line” as a £1,000 discount from the manufacturer and a £1,000 discount from HM Government ie it should be shown as part payment of the invoiced price.

FINANCING

How are financing deals covered under the scheme?

Financing deals are eligible where the customer will ultimately own the new vehicle and where the Registered Keeper’s name and address appears on the new vehicle registration certificate. The scrappage incentive should not form part of financing arrangements or be used as a deposit. Leasing and contract hire packages are ineligible.

Can the new vehicle be paid for by an individual third party ie someone other than the registered keeper of the new vehicle?

Yes, a third party can pay for the new vehicle, for example a spouse or parent buying a car for their partner or child. In these cases, the third party making the payment, should be shown on the invoice in addition to the person acquiring the vehicle ie the registered keeper.

Can the third party be a company?

Yes, if the vehicle is registered to an individual person but the finance is being paid for by their company, for example someone who is self-employed. Again in these cases, the third party making the payment, should be shown on the invoice in addition to the person acquiring the vehicle ie the registered keeper. If the third party is a company providing a leasing or contract hire package where the ownership rests with the leasing or contract hire package company or a company providing any other financial scheme where the customer and keeper will not ultimately own the new vehicle and/or where the registered keeper's name and address does not appear on the new vehicle registration certificate then that would be ineligible.

Can the new vehicle be paid by finance arrangements in the name of a third party other than the registered keeper?

Yes, providing it is not a leasing or contract hire package where the ownership rests with the leasing or contract hire package company or any other financing arrangement where the customer and keeper will not ultimately own the new vehicle and/or where the registered keeper's name and address does not appear on the new vehicle registration certificate. Again in these cases, the third party making the payment, should be shown on the invoice in addition to the person acquiring the vehicle ie the registered keeper.

Some providers of financing packages will require the new vehicle to be registered in the same name as appears on the finance agreement. Where a finance provider insists that a new vehicle is registered in the same name that appears on the financing agreement (and that is not the keeper of the old and new vehicles), then this arrangement would not qualify under the scrappage scheme. Consumers can choose the most suitable finance package for their circumstances.

Are motability customers eligible?

The same rules apply to motability customers as for other financing deals under the scheme. Motability customers are eligible where they are buying the vehicle on Hire Purchase terms and appearing as the registered keeper on the new vehicle registration certificate.

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