I have just been looking at HMRC website about the rules for charging VAT.
I have found the following information. I've taken the relevant information from this page HM Revenue & Customs: When transactions take place for VAT purposes
which also links to this page HM Revenue & Customs: Instalment payments, deposits, credit sales and VAT
"Time of supply for goods and services
The time of supply (tax point) for VAT purposes is defined as follows:
For transactions where no VAT invoice is issued (for example, sales to customers who aren't registered for VAT) - the time of supply is normally the date the supply physically takes place (as defined below). For transactions where there is a VAT invoice - the time of supply is normally the date of the invoice, even if this is before or after the date the supply physically took place (as defined below).
For goods, the time when the goods are considered to be supplied for VAT purposes is the date when one of these happens:
the supplier sends the goods to the customer
the customer collects the goods from the supplier
the goods (which are not either sent or collected) are made available for the customer to use - for example, if the supplier is assembling something on the customer's premises
The above general principles for working out the time of supply do not apply in the following situations:
If the supplier receives part payment before the date when the supply takes place. The time of supply becomes the date the part-payment is received (assuming no VAT invoice has been issued before this date - in which case the time of supply is the date the invoice is issued) - but only for the amount of the payment. The time of supply for the remainder will follow the normal rules - and might fall in a different VAT period, and so have to go onto a different VAT Return."
Advance payments and deposits
An advance payment, or deposit, is a proportion of the total selling price that a customer pays before you supply them with goods or services. If you ask for an advance payment, the tax point is whichever of the following happens first:
the date you issue a VAT invoice for the advance payment
the date you receive the advance payment
You include the VAT on the advance payment on the VAT Return for the period when the tax point occurs.
If the customer pays you the remaining balance before the goods are delivered or the services are performed, another tax point is created when whichever of the following happens first:
you issue a VAT invoice for the balance
you receive payment of the balance
So you include the VAT on the balance on the return for the period when the tax point occurs."
This would appear to suggest that if I pay for my car in full before the VAT rise that I will only be liable for VAT at the current 17.5% rate. Anybody know anything more about this?