Ask Honest John

Honest John Ask Honest John » Is the scheme which allows British servicemen to buy VAT-free vehicles a good deal?
What is life like with your car? Let us know and win £500 in John Lewis vouchers | No thanks

Is the scheme which allows British servicemen to buy VAT-free vehicles a good deal?

Under The Status of Forces Agreement (SOFA) British military personnel and civilian support staff serving in Germany are entitled to purchase a new car (New Means of Transport) free of VAT. Once the car is at least 12 months old the servicemen sells it back to dealers in the UK without any VAT liability and theoretically gets a years motoring free of charge.

Under the scheme, I bought a Volvo XC60 for £25,300, expecting to get the money back upon reselling. But I have been offered no more than £20,500, despite the fact that UK Volvo dealers are advertising these cars for £25,000 - £28,000. I worry that many low-paid servicemen, having been lured into the scheme, now face a loss of £5000 or more that they can ill afford.

Asked on 13 October 2012 by (Details withheld), BFPO.

Answered by Honest John
The problem is current UK discounts on new cars, especially on Volvo SUVs. This makes new cars unprofitable for dealers, so they try to make it up on nearly new cars. But I was not aware of the extent to which servicemen could get stitched up.

Exclusive to Honest John users: 12% off ALA GAP Insurance

Reader Offer: 12% off ALA GAP Insurance
Similar questions
I just purchased a new car and was offered a dealer discount of £700, plus a dealer partner discount of £1300, making a total of £2000. The invoice shows a reduced amount, which when queried, was advised...
In a recent Telegraph Motoring section, ‘Mr. Money’ stated that "making VAT payments used to be optional, now it is legally avoidable." Both statements are incorrect. The idea that HMCR would allow any...
I have seen a pre-registered 2016 Subaru Impreza I RC with 11 miles on the clock at a dealership for £16,495. I think the RRP for these cars is about £18,980. Am I correct in thinking that the price the...
Related models
Comfortable and refined. Good long-distance car. Stylish cabin and R Design models look sporty.