15% Vat

[Andy-R]

So the Government are to reduce the the VAT rate to 15% so most of the stuff we buy will be cheaper, however they plan on paying for this reduction by increasing the tax on tobacco/ciggies, alcohol and petrol, petrol has only just gone down to an almost acceptable price and now they plan on putting it back up, ok we need to do something to get the ecconomy back on track but it looks like it's the motorists who a going to stump up for it again. Maybe the Government should cut back on there own personal spending and put the money into the country's giant piggy bank.

[Dave-Ellen]

as ever its all smoke & mirrors (all parties the same..............)

[treborlex]

If I understand it right once the VAT goes back up the tax on tobacco/ciggies, alcohol and petrol does not come back down

[Ian M]

If I understand it right once the VAT goes back up the tax on tobacco/ciggies, alcohol and petrol does not come back down

It was inevitable! Still, look on the bright side, the road tax on our gas guzzlers doesn't got up quite as much as we feared.

[Mark W]

complete waste of time, will cost businesses a fortune updating their pricing and many won't even bother passing on the savings. The government even managed to sneak in an increase on fuel duty which will not go back down in 13 months time.

As they now have some control over our largest banks then perhaps they should have forced them to lower their rates in line with the boe rate- nearly everyone would benefit and costs the country nothing. It's also something we would see as a lump sum each month rather than saving the odd penny here and there.

I wasn't going to buy that new tv at 500 quid but now it's only 487.50 I'm going to buy 2 of them they are so cheap.

[ihpj]

complete waste of time, will cost businesses a fortune updating their pricing...

Heard this argument all day today. What I don't understand is why would it be so difficult to implement?

Surely all any retailer needs to do is to take 2.5% off the total bill price before payment? This is what Homebase do when they have their 10% days. They don't go round changing each and ever price, just sticker up the big items and discount is taken off at the till at time of payment. I really don't see the problem here regardless if you are M&S big or a small family run place. You leave the sticker price 'as is' and just apply a 2.5% discount at time of payment.

It is no different than a store/company offering a flat 20% discount for one day or for one year?

[GlynnB]

It would depend on the type of store. Some items are zero rated for VAT, there are some items that are charged at 5% and some are 17.5% - soon to be 15%. But at 17.5% to 15% you can' reduce it by 2.5% as the retailer loses out - it will be something more like 2.25% - but your argument would hold using that figure for all the 17.5% items. My son has a shop using all 3 VAT rates.

[Mark W]

Its not just the price you charge at the till either - Its all the backend accounting systems that need to account for the VAT and apportion correctly - They havent exactly allowed much time for the change either.

Also, as per Glynns post - Multiple rates applied to different things means you cant blanketly reduce your price at the till - otherwise businesses could be even worse off.

There is a huge difference between a blanket 20% off day by the store and the calculation/payment of taxes at different rates.

[Andy-R]

complete waste of time, will cost businesses a fortune updating their pricing...

Heard this argument all day today. What I don't understand is why would it be so difficult to implement?

Surely all any retailer needs to do is to take 2.5% off the total bill price before payment? This is what Homebase do when they have their 10% days. They don't go round changing each and ever price, just sticker up the big items and discount is taken off at the till at time of payment. I really don't see the problem here regardless if you are M&S big or a small family run place. You leave the sticker price 'as is' and just apply a 2.5% discount at time of payment.

It is no different than a store/company offering a flat 20% discount for one day or for one year?

Not that simple mate, tax on booze is going up so when you get your shopping at Asda or Tesco or wherever and buy ale then they can't take 2.5% off they have to add whatever the increase is on, so will basically have to re-price everything.

[TheDon]

This whole thing is absolutely awful.. really and truely..

What is the realistic repayment time frame for 118 billion pounds? not to mention all the other money that has been borrowed?

So no doubt my children (if and when i have them) will still be paying for this long after the imbicile who implimented it has died!

This will do no more than bankrupt the country if things get any worse..

i mean all that borrowing to save 2p on a **** mars bar..

i would and am happy to pay the extra 2.5% to stop the country getting into more trouble..

I think what is needed is a serious overthrow of the current government.. and a long term plan to take place and lead..

Military type control untill the economy is strong again.. i think the time for people to be able to do what they want is coming to an end...

[dave1]

A reduction of VAT from 17.5% to 15% does not reduce the price of an item by 2.5% as so many people seem to think. It reduces it by a smaller figure, to use simple figures, 25p in every £11.75, whereas the commonly held notion of reducing the price by 2.5% would equate to around 29/30p reduction reduction on a price of £11.75.

The 2.5% reduction applies only to the tax imposed on the item not the cost of the item itself.

Petrol prices shouldn't go up because the extra duty will just cancel out the drop in VAT levels.

Nothing I've heard in this Budget preview gives me any real optimism for a rapid improvement in our economy.

[Andy-R]

Petrol is expected to increase by 2p per litre.

[Mark W]

Petrol prices shouldn't go up because the extra duty will just cancel out the drop in VAT levels.

Even if that was the case and and the 2 cancelled each other out - The VAT rate is only valid for 13 months and will return to 17.5% in Jan 2010 - Therefore they have used the current mess to sneak in an increase in the duty on fuel now - as it will not be lowered in Jan 2010

In my household, the 3 biggest bills are

1) My mortgage

2) Petrol

3) Gas/Electric

I'm guessing that for the majority of the public - these are the same (although 2 and 3 may be reversed)

The measures address none of these and yet are going to cost the taxpayer millions in years to come.....Well done to the government - I'm also wondering how many times Mr Brown will now be quoting "Boom and Bust" .....I suspect those words will now be erased from his vocabulary yet they were frequently used previously....Bunch of Muppets

[Mike_B]

This whole thing is absolutely awful.. really and truely..

What is the realistic repayment time frame for 118 billion pounds? not to mention all the other money that has been borrowed?

So no doubt my children (if and when i have them) will still be paying for this long after the imbicile who implimented it has died!

This will do no more than bankrupt the country if things get any worse..

i mean all that borrowing to save 2p on a **** mars bar..

i would and am happy to pay the extra 2.5% to stop the country getting into more trouble..

I think what is needed is a serious overthrow of the current government.. and a long term plan to take place and lead..

Military type control untill the economy is strong again.. i think the time for people to be able to do what they want is coming to an end...

The 118bn figure you mention is just the borrowing for ONE year - they are also borrowing 78bn THIS year. The additional tax from the new 45% band will barely, if at all, cover the interest on this amount, let alone pay it down.

Of course they are bankrupting the country - they are the Labour party. Labour supports poor people (well, in theory they do). When those poor people are dragged up into a middle-class style income bracket, they don't vote Labour any more. The eternal paradox of socialism... if it works too well it's not needed any more, which is why there is always 'more work to be done' which means more taxes in support of more spending. Of course these days 'taxes' are replaced by 'borrowing' and 'spending' is replaced by 'investment' but the effects are exactly the same - big bills for everyone and the country running out of money anyway.

The VAT cut will actually affect me adversely. My VAT registered company subscribes to the flat-rate scheme (won't bore you with the details) and as a result of the drop to 15%, I will be roughly £50 a month worse off than before. Cheers, Gordon. You incompetent pillock.

[Tango]

The VAT cut will actually affect me adversely. My VAT registered company subscribes to the flat-rate scheme (won't bore you with the details) and as a result of the drop to 15%, I will be roughly £50 a month worse off than before. Cheers, Gordon. You incompetent pillock.

Ditto, but I was hoping the flat rate would be re-adjusted in line with the change, or am I being overly optimistic about the competency of this :tsktsk: government?

[Dave-Ellen]

I'll not be passing the 2.5% cut on for sure.............the £ has dropped against the yen (was 195 not so long ago now 149) that margins have been slashed to almost nothing

[TheDon]

im wondering once i send out my companies invoices how many idiots are going to be calling up wanting the 15% vat rate.. even though they are end of month accounts... wondering if its worth just chucking a little cover letter in with them to notify that only december accounts will be at the 15% rate

[Mike_B]

The VAT cut will actually affect me adversely. My VAT registered company subscribes to the flat-rate scheme (won't bore you with the details) and as a result of the drop to 15%, I will be roughly £50 a month worse off than before. Cheers, Gordon. You incompetent pillock.

Ditto, but I was hoping the flat rate would be re-adjusted in line with the change, or am I being overly optimistic about the competency of this :tsktsk: government?

It has been adjusted, just not by quite enough. So tens of thousands of really small businesses will be paying MORE to the government as a result of this 'boosting the economy' measure.

By a lucky fluke, my company year ends right this month, so at least I've not got to mess around with part-year changes to the accounts.

[Steve ( West Mids )]

Are the flat rates chaniging? I've seen nothing about that, has anyybody got a link?

I thought currently invoice £100, vat £17.50, pay vatman £13, I get £4.50 of it

after December invloice £100, vat £15, pay vatman £10.50. I get £4.50 of it

[Andy-R]

Don't know how it's going to work, but I can't see it making people buy houses which means i'm Fooked and will need a new job

[Dave-Ellen]

Don't know how it's going to work, but I can't see it making people buy houses which means i'm Fooked and will need a new job

its about confidence............trains going into london are not so packed with builders anymore...............why take a risk moving if your job may go..........

funnily enough the aftermarket industry is doing OK as people are looking to make changes to their car rather than chop it in

[graham8370]

Are the flat rates chaniging? I've seen nothing about that, has anyybody got a link?

I thought currently invoice £100, vat £17.50, pay vatman £13, I get £4.50 of it

after December invloice £100, vat £15, pay vatman £10.50. I get £4.50 of it

Steve, If you are collecting £17.50 in VAT and only giving the VATman £13 you should keep it very quiet.

[Mike_B]

Are the flat rates chaniging? I've seen nothing about that, has anyybody got a link?

I thought currently invoice £100, vat £17.50, pay vatman £13, I get £4.50 of it

after December invloice £100, vat £15, pay vatman £10.50. I get £4.50 of it

Yeah, it's at the bottom of this link in Index E:

New Flat Rate VAT tables

Your calculations are slightly off:

Currently invoice £100, VAT takes it up to £117.50, you pay 13% of that, so VAT man gets £15.27

Now you'll invoice £100, VAT takes it up to £115, you pay 11.5% of that, so VAT man gets £13.25

With the former you get to keep £2.23, now you get to keep £1.75 - so you've lost out. Remember with flat rate VAT you pay the percentage on the gross, not the net.

[Andy-R]

Don't know how it's going to work, but I can't see it making people buy houses which means i'm Fooked and will need a new job

its about confidence............trains going into london are not so packed with builders anymore...............why take a risk moving if your job may go..........

funnily enough the aftermarket industry is doing OK as people are looking to make changes to their car rather than chop it in

Your right about the confidence thing, the slump in the housing market should of worked in my favour with more landlords buying new houses to rent to people who can't get mortgages, but then the banks s :tsktsk: t themselves and no one could aford to buy anything as the deposits are too high, so even buy to let has gone down the crapper.

Anyone need a new carpet fitting BTW

[Steve ( West Mids )]

Currently invoice £100, VAT takes it up to £117.50, you pay 13% of that, so VAT man gets £15.27

Now you'll invoice £100, VAT takes it up to £115, you pay 11.5% of that, so VAT man gets £13.25

With the former you get to keep £2.23, now you get to keep £1.75 - so you've lost out. Remember with flat rate VAT you pay the percentage on the gross, not the net.

Thanks Mike B. I'll double check my spreadsheet to see if I'm calculating on gross or net.

So how are they helping small businesses :( It's going to cost me 48p for every £100 invoiced.

I wonder if Poundland will now be called 97.9p land and will reduce prices?