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Usually when you buy a new car you can talk to the dealer about scrapping your old one. If you car is eligible you will be able to get £2,000 off the OTR price for the new car. Of course you could probably negotiate down from the OTR price anyway.

There are several requirements placed on the car you are scrapping, notably, the car must have been registered before 31st October 1999, have a valid tax disc and MOT, must be insured and must be registered to you.

Source: Scrap Car Kingston - http://www.scrapcarskingston.co.uk/the-car-scrappage-scheme

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Q: Govenment car scrap allowance how does it work?
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