VAT to be cut by 2.5%!!

[Yoshi]

Was reading this in the paper this morning, found the story on the bbc news website as well.  BBC News

Looks promising, maybe they will lower fuel duty as well :-o

Stranger things have happened!

[Disco Matt]

I do find myself wondering how many high street stores will really cut their prices by 2.5% if this happens - those who quote prices excluding VAT will have to but I wouldn't be surprised if the rest find some excuse not to pass it on...

[richo]

When they put it up from 15% years ago they said then it would'nt last long at the new rate and it would go back to 15% in a while.
If it happens it's been a long while if you ask me.

[carbore]

This could be a pain for small shops, although the savings could offset that.

I worked in a shop when the VAT lifted from 15 to 17.5% and we had to re price every single item as it was stick on price tickets!

I wouldnt want to do that with christmas stock in, perhaps its soon engough before. Mind you moist Christmas lines are rubbish so they deserve the work.

[V8MoneyPit]

.......moist Christmas lines are rubbish .......

Hmmm..... moist Christmas lines? The mind boggles  ;) :lol:

I can't help feeling a reduction in income tax would benefit people more than a cut in VAT. Not me though .... I don't earn enough  :(

[MuddyMike]

What would the pound shops do?
 Become 97.8p shops :-)

Mike

[crazymac]

The only possible saving I can see myself making from this will be in my MOT soon??

[solihull-mick]

Vat isnt put on MOT tests, 

[V8MoneyPit]

Many businesses have been having a hard time of it with rising costs and reduction in retail sector spending. The problem with reducing VAT is that businesses may see it as an oportunity to put their prices up to make up for losses they have been seeing. That way, retail customers won't see any price reductions at all.

If they were to reduce income tax, people would genuinely see more money in their pocket and be tempted to spend it. That is what they are trying to encourage, after all.

[Disco Matt]

They're talking about a 45% income tax band for people earning £150k plus to fund it - don't think that will affect many of us, but it'll do a nice job on the bankers who are responsible for the whole mess!  :lol:

[crazymac]

Vat isnt put on MOT tests, 

isn't it? didn't know that! How come every other garage bill you get does? (obviously if the garage is VAT registered!!)

[Llanigraham]

Been looking at this for our shop, and according to 1 expert we will have to reduce our prices on the goods that do attract VAT by 2.1%. Well sorry but we will be using 2%.


Wooppee, an extra 0.1% profit!!!!!

[muddyjames]

on the radio earlier they were saying a chocy bar will come down by 2p and a £100 item will come down to £95. Not really a huge saving but all adds up I suppose! :roll:

[V8MoneyPit]

Vat isnt put on MOT tests, 

isn't it? didn't know that! How come every other garage bill you get does? (obviously if the garage is VAT registered!!)

It's the test that is zero rated for VAT. The rest of the garage services are VATable.

on the radio earlier they were saying a chocy bar will come down by 2p and a £100 item will come down to £95. Not really a huge saving but all adds up I suppose! :roll:

Their maths is a little poor, isn't it? An item costing £100, including VAT, now would be £97.88 with 15% instead of 17.5%. And to my reckoning, a 40p sweet will loose less than a penny!

[muddyjames]

on the radio earlier they were saying a chocy bar will come down by 2p and a £100 item will come down to £95. Not really a huge saving but all adds up I suppose! :roll:

Their maths is a little poor, isn't it? An item costing £100, including VAT, now would be £97.88 with 15% instead of 17.5%. And to my reckoning, a 40p sweet will loose less than a penny!

Maybe they were talking about a huge Toblerone :lol:

[Bob696]

Duty on fuel, booz and fags is being put up by 2.5% to offset the drop in VAT. So no change. The BAD news is that when VAT goes back up to 17.5% this extra duty won't drop.

[LiftedDisco]

OK.. time for a sanity check as this useless bunch of numpties appear to have locked themselves in the asylum (oh how sweet that would be...  :P )

Who is actually going to implement this 'reduction in VAT'?

Small businesses...

Who isn't going to get paid for all the work they do?  Yep, you've got it... small businesses!

Take a business that I used to be involved in... a caterer who runs the public catering in a major tourist attraction.  At last count there were something like 280 options on the cash tills and there were a total of 17 tills around the site.

Each till will need to be re-programmed - some items are VAT free, some are at full rate but need to be revised and some are alcohol and will therefore remain at full rate.  Each till will take around an hour to an hour and a half to re-programme... so who's up for working a night shift on Sunday?

Methinks Mr Darling will be cosy in his bed...

AND THEN...

When the next VAT inspection comes around... who's going to cop for the inevitable fines and penalties because the poor small businessman has got it wrong somewhere, somehow?

Given that there is no VAT on mortgages, rent, food (apart from choccy biccys...) and the rate for domestic power isn't changing, I fail to see how this is going to dramatically bump start the economy as peoples' disposable income won't change.

So glad they have thought this through...

Rant over... sort of!      

[crazymac]

OK.. time for a sanity check as this useless bunch of numpties appear to have locked themselves in the asylum (oh how sweet that would be...  :P )

Given that there is no VAT on mortgages, rent, food (apart from choccy biccys...) and the rate for domestic power isn't changing, I fail to see how this is going to dramatically bump start the economy as peoples' disposable income won't change.

Won't it,

Vat goes down by 2.5%

Alchohol, tobacco and fuel INCREASES by 2.5%

so thats 3 items up, one down!!!

And on top of that, NATIONAL INSURANCE IN INCREASNG BY 0.5%

So by my calculations i'll be WORSE off financially, can see myself rushing off to the shops as I write this

[LiftedDisco]

[
Won't it,

Vat goes down by 2.5%

Alchohol, tobacco and fuel INCREASES by 2.5%

so thats 3 items up, one down!!!

Nah... disposable income won't change... at least not in terms that will make a real difference, but the split of how they tax you when you do get around to spending the pittance that they have graciously left you will change and it would appear that it will be for the worse.

We're doomed... we're doomed!

[V8MoneyPit]

Just another thought.....

Given the change is set for Monday, retail outlets are likely to have a dire week before then, aren't they? Let's face it, who is going to do non-essential shopping this week when they can make a small saving next week? Have the government considered businesses cash flow?

[Disco Matt]

It really is more of a psychological thing than a real one. It's £2.50 for every £100 you spend. In other words you might save £10 if you spent £400 on Christmas stuff - not much really is it!

But if you think about it, the whole recession business is psychological. People hear rumours of it, reduce their spending, and hey presto you have reduced economic growth.

I too was pondering the short-term effect on cashflow - suspect there will be a dip in takings! Nobody seems to know whether it's a case of it coming in on Monday (as in, anything bought from 00:01 on Monday will be taxed at 15%) or whether it comes in from Monday (as in, from 00:01 Tuesday).

[V8MoneyPit]

I too was pondering the short-term effect on cashflow - suspect there will be a dip in takings! Nobody seems to know whether it's a case of it coming in on Monday (as in, anything bought from 00:01 on Monday will be taxed at 15%) or whether it comes in from Monday (as in, from 00:01 Tuesday).

I have the statement from HM Revenue & Customs in front of me and is says "..... goods or services on or after the 1st December....". So it's Sunday night onwards.

[littlepow]

And on top of that, NATIONAL INSURANCE IN INCREASNG BY 0.5%

Thas the bit I like best, so If you are finding the present market hard on your income and expenditures, they'll just take more money so you have to cut back even more!

[V8MoneyPit]

I don't pay NI  :dance:

[muddyjames]

And on top of that, NATIONAL INSURANCE IN INCREASNG BY 0.5%

Thas the bit I like best, so If you are finding the present market hard on your income and expenditures, they'll just take more money so you have to cut back even more!

so really VAT is going down by 2% not 2.5!

[V8MoneyPit]

And on top of that, NATIONAL INSURANCE IN INCREASNG BY 0.5%

Thas the bit I like best, so If you are finding the present market hard on your income and expenditures, they'll just take more money so you have to cut back even more!

so really VAT is going down by 2% not 2.5!

Plus a huge hike in income tax for high earners to more than compensate for the 2.5% cut in VAT. You don't get anything for free in the world.

And what about this.....?
http://www.telegraph.co.uk/finance/financetopics/budget/3521525/Pre-Budget-report-Secret-plan-for-VAT-increase-to-18.5-per-cent.html

[POTASH]

The move to increase fuel duty by 2p has been introduced to offset the rate cut in VAT from 17.5% to 15%. However, although the VAT holiday will last 13 months, the 2p duty rise is permanent.

When VAT returns to 17.5% motorists will still be paying the higher rate fuel tax of 52.35p per litre and the higher rate VAT, making tax 74% of the total cost of a litre of fuel, and instantly boosting the cost of fuel by 2p a litre.

[muddyjames]

so really VAT is going down by 2% not 2.5!

Plus a huge hike in income tax for high earners to more than compensate for the 2.5% cut in VAT. You don't get anything for free in the world.

[/quote]

Something I dont need to worry about being a bin man :lol:

[crazymac]

Plus a huge hike in income tax for high earners to more than compensate for the 2.5% cut in VAT. You don't get anything for free in the world.

What huge hike in income tax? 1st of all this "45%" rate does not come in till 2011!! After the VAT has been increased back up again! And ontop of that, there are already lots of different rates for income tax

for incomes above £43,875 to £100,000, the rate of tax will be 40%.

For incomes from £100,000 to £106,475 the rate will increase to 50%.

For incomes above £106,475 up to £140,000, the rate drops to 40% again.

For incomes of £140,001 to £146,475 the tax rate is again 50%

and for incomes above £150,000 the rate will be 45%

[zebidee]

The move to increase fuel duty by 2p has been introduced to offset the rate cut in VAT from 17.5% to 15%. However, although the VAT holiday will last 13 months, the 2p duty rise is permanent.

Bwuh!?!???!

That's totally out of order - I know they've been looking to bring that in for months but that's totally by the back door.

I'll be surprised if they somehow get back in at the next election - not that I think the Tories would be any better.

Z~