OTish: New car options madness

Saw that. Tesla have being doing it for a while for some advanced features but not for a f*cking resistive element that’s already built in!

I think BMW will either lose customers or quietly lose the subscription idea for anything so basic.

Tim

In a EV is probably better to heat the driver and passenger via heated seat/steering wheel rather than the whole cabin so they are probably banking on 100% take-up.

I pointed out in another forum that this sounds like a fairly logical response to the way vehicle taxation works in countries where certain tax elements are based on the original sale price. I know that in the Netherlands leasing companies buy cars with the most basic trim level and then send them to specialist companies to have all the options and premium trim fitted. This can mean replacing a brand new cloth interior with leather, for example.

In terms of the whole life cost for the car I can see it being a lot cheaper to fit certain options at the factory and then recover costs later via activation fees.

True, but who’s gonna buy a car from a company that holds basic features to ransom? Besides, the electric BMWs are hideous. ;-)

There are plenty of makers who won’t screw you for heated seats.

Tim

another triumph of the single European market ?

The Dutch taxman may be naive but isn't the HMRC wise to things like that?

Yes - but the trick could still work to avoid the additional VED on some cars with a list price over £40,000.

HMRC are well aware of the issue. The benefit in kind charge on a company car has depended on its "list price" since 1994. That price includes accessories fitted at any time.

The same definition of "list price" is used for the additional VED on cars costing over £40,000 but there does /not/ include accessories fitted after the car is first registered. I don't know why but guess that HMRC baulked at the complexity and cost (to them and the trade) of setting up a whole new system of returns. They may well have told the trade they would act if there's evidence of abuse at scale.

HMRC are more likely to have baulked at the impossibility of the task (since complexity seems to be their trademark)

Privately owned and registered cars are subject to the same VED regime as company cars, so an aftermarket set of alloy wheels (just as an example) would need to have a different VAT rate depending on the end user, and possibly a different rate depending on the value of any company car which they are fitted to - leaving wholesalers of alloy wheels in a rather difficult position.

In more than 40 years of self-employment / freelancing / whatever I have never bothered with claiming for a company car as it’s much easier to claim private car mileage, and if the mileage piles up during the financial year then just register a different car (maybe like the one that my wife drives ?)

My general impression is that company cars are dying out quite a bit anyway and that accountants have found better ways to get things done, often involving contract hired pool cars.

Getting back to the OP however ... I am wondering if some of these power hungry gizmos, like seat / mirror / screen heaters, demisters, aircon etc will need to be thought about in terms of the amount of battery power which they will consume on electric vehicles. I assume that most electric cars are fitted with power steering too ?

Tesla has been known to revoke rights to the features when the car is sold second hand. So that Tesla where somebody paid for Full Self Driving (which has never worked as promised) can have it removed when it's sold on later.

I don't know if that's legal in the US, but suspect it wouldn't fly in the EU (due to the Doctrine of First Sale).

Theo

What makes you think they aren’t thought about?

Yep. Power consumption by all these ancillaries doesn’t really amount to much compared to the overall battery capacity apart from cabin heating. Heated seats and steering wheel use a lot less power than cabin heating and it makes sense when possible to uses these instead if you want to maximise range in cold weather.

Tim

My point was simply that the income tax legislation for the price of a company car is used for the additional VED charge but without dealing with accessories fitted later. That does of course apply to all cars.

VAT is separate; and there's no problem with accessories for VAT because it applies whether extras are fitted before or after registration.

That sounds quite plausible - a number of their offerings are in the £35k-40k bracket and if you were to load up all the software options it's not implausible they might take you over.

Also it should be noted some options aren't subscription, they're one-time purchases. So it's still possible to get a cheaper base car and then buy options later. As I suppose you always could do with fitting fancier alloys or whatever after purchase.

If I buy some fancy alloys after owning it for some time, does the HMRC list price go up? So the list price is the sum of every time spent on the car since it's manufacture? (neglecting consumable items like oil and tyres)

Would a subscription mean I'd have to add up the cost of N months of heated seats to get the current 'list price'?

Theo

Only if it's a "company car" you make available for someone else's private use.

You only increase the list price for replacements if the new is superior to the old - e.g. leather in place of fabric seats.

No. Subscriptions like BMW's aren't equipment attached to the car so don't affect the price of the car for tax purposes. And there's an exemption for a benefit connected with a taxable car (so people don't end up taxed twice for things like insurance). So I think they escape tax altogether (like e.g. personalised number plates on a company car).

This was discussed on R5 Wake Up to Money recently. It was stated that it is easier to manufacture a car with a lot of options already fitted but to enable them via software if the customer chooses the option, rather than have complicated build schedules with knock-on impacts on Just-in-time manufacturing.

I guess the question is what happens when the 2nd owner buys the car

I have a suspicion that all the major manufacturers will go down this route.

This sort of thing isn't new. Some 20 years ago, a piece of electronic test equipment I needed to use lacked certain vital optional extras. At the time, adding such things would typically have meant fitting additional plug-in cards or modules. As it turned out, all that was required was a phone call to the supplier who, for an appropriate payment, supplied a secret code that could be downloaded into the machine via an RS232 link.