Northern Ireland car insurance customers keen on a new set of wheels are being directed towards used-car websites ahead of January's new tax rate, which is set to push up the price of new models.

According to one retailer, the move from a 15 per cent to a 17.5 per cent rate of VAT will add £250 to the cost of a new car with a £10,000 pre-tax price tag. Furthermore, representatives for Autoquake point out, a number of car manufacturers have already raised prices moving towards 2010.

"Ford's prices have gone up no fewer than four times in the past 12 months. While the pound remains weak against the euro, increases by other manufacturers can't be ruled out," notes Fredrik Skantze, the site's founder. "With the scrappage scheme likely to run out of money in February, many buyers will once again find a new car is just too expensive."

Although VAT applies to the invoice price of every new car, in the used market the selling dealer normally only pays VAT on profit margins. VAT-qualifying cars are valued by trade guides in the same way as other used cars, minimising the theoretical impact of January's VAT increase on prices.