When I bought the new Seat the dealer gave me £7800 for the BMW but he also gave me a £2000 off the Seat. Guess you could argue that if he had charged me retail for the Seat I would have got £9800 for the BMW.

Regardless of that he put the BMW on the forcourt for £9300, after 2 months he dropped it to £9000 and then after 5 months he dropped it to £8600. The car needed no work other than the usual detailing and a few stone chips but if the dealer did get £8600 he made £800 profit but he would have still have had to supply a warranty and carry out repairs. Not a very good return on his investment really, suppose it would have been OK if he had sold it in a few days but not after 5 months.

Did I feel sorry for him, no.

Don't forget the VAT liability as well.

Which is only on the margin, not the whole amount.

It is exactly the same as on any VAT'able good or service. A seller only ever pays VAT on the margin - just that you reclaim some and pay some more on a VAT qualifying item or car. It all works out the same.

It is nearly 17% so a fair chunk of any profit (and note it is 17% of the whole margin not including any prep and sales costs - so if you buy a car for £4000 and sell for £5000, £170 gets paid to the VAT man even if you spend £500 prepping and advertising it - although you can relclaim VAT on those expenses.)

I thought VAT was 20%?

It is, but the nett difference between selling and buying means a VAT registered retailer of anything pays 16.6% of their profit margin in VAT.

Tesco buys Toaster for £10+VAT from Toasters Inc. (£12.00 inc. VAT but reclaims the £2).

Tesco sells Toaster for £20+VAT (£24.00) and pays £4 to HMRC in VAT.

Total difference between buying and selling = £24-£12=£12.00. Pays VAT Man £2 balance. £2 is 16.6% of £12.

With a used car it works exactly the same but the VAT amount is not reclaimed/repaid unless it is a "VAT Qualifying" car so the 16.6% is just paid direct.

You should see the markup on workshop labour rates - they'll charge the customer £40-100 per hour with VAT on top - mechanics get £12-18 (I'm guessing).

Its not just the motor trade that charges high hourly rates. I am paid about £15 an hour for my troubles yet the clients are charged £60 an hour for my time. We have modest offices in a 110 year old building that is cheap but mostly empty and the only equipment I need is a PC.

Its not just the motor trade that charges high hourly rates. I am paid about £15 an hour for my troubles yet the clients are charged £60 an hour for my time. We have modest offices in a 110 year old building that is cheap but mostly empty and the only equipment I need is a PC.

Simple answer to that one. Dump the employer, get a cheap office and PC, nick a couple of clients and charge them £50.

I'm not complaining, its how things work in big wide world. Its not as simple as stealing clients and charging them £50 an hour, wish it was. My skills are just one part of a jigsaw, without the other people and their skills there would be no jobs to charge £50 and hour for.