Holiday VAT Cut

[irc]

As I VAT cut for holidays. So if I booked a holiday cottage last year and paid deposit does the cut apply when I pay the balance or is the relevent date when it was booked?

[Camelot1971]

I'm not expecting any business to pass on the savings to be honest.

[irc]

Will they have a choice where the invoice is quoted as X plus VAT?

[Camelot1971]

I expect they will raise the price and add 5% to it so it is legal. Just a guess - perhaps some might pass the drop on.

[journeymanpro]

I find it an odd one. Surely if they pass the vat saving on they are likely to attract people that may now be able to afford a holiday?

It's not just businesses that are struggling for cash, consumers are too.

[anonymous-user]

irc said:

As I VAT cut for holidays. So if I booked a holiday cottage last year and paid deposit does the cut apply when I pay the balance or is the relevent date when it was booked?

It's the "tax point" which counts - usually the date of invoice. You might be able to cancel and get a refund of your deposit, then rebook with the whole thing at the lower rate. More information on this link,
https://www.pkf-francisclark.co.uk/budget-updates/...

[eliot]

If i pay in full for a Holiday in summer 2021 this year do i get it at the lower vat rate?
edit;
And what if i just put a deposit on a 2021 Holiday this year?

[anonymous-user]

The lower rate is only relevant if the supplier maintains the same VAT exclusive pricing.

I wouldn't expect many businesses to pass on the VAT saving, they'll take the extra margin.

[eliot]

RonaldMcDonaldAteMyCat said:

The lower rate is only relevant if the supplier maintains the same VAT exclusive pricing.

I wouldn't expect many businesses to pass on the VAT saving, they'll take the extra margin.

That's their prerogative - but customers will keep their hands in their pockets and ultimately damage the very sector this change is supposed to help

[journeymanpro]

eliot said:

That's their prerogative - but customers will keep their hands in their pockets and ultimately damage the very sector this change is supposed to help

Exactly my thinking. Consumers will know they are overpaying by 15%

[anonymous-user]

eliot said:

That's their prerogative - but customers will keep their hands in their pockets and ultimately damage the very sector this change is supposed to help

I don't reckon a 12% drop in holiday prices would cause a surge in bookings. In any case there is pent up demand and the pricing is largely in the hands of the airlines and hotels.

On the other hand, businesses really do need the extra cash and are likely to pocket it.

[irc]

rockin said:

irc said:

As I VAT cut for holidays. So if I booked a holiday cottage last year and paid deposit does the cut apply when I pay the balance or is the relevent date when it was booked?

It's the "tax point" which counts - usually the date of invoice. You might be able to cancel and get a refund of your deposit, then rebook with the whole thing at the lower rate. More information on this link,
https://www.pkf-francisclark.co.uk/budget-updates/...

Thanks for the useful link. I tend to agree with this section given my cottage owner will have lost much income this year wereas I have been working normally.

"7. Do I have to pass the VAT reduction to my customers by reducing my prices?

As the measure is aimed at helping businesses and protecting jobs, our view is that the business should retain the VAT saving. However, it is the business’s decision whether to reduce its prices or not."

[Simpo Two]

Customers (of which I'm one) will reasonably expect a reduction because they know that 5 is less than 20. The company will retain just as much money as it would have done at the time of booking because they only keep the net amount anyway.

So a company that keeps its price the same and pockets the difference, even if they can, is not going to do well in the PR stakes I think.

[eliot]

Simpo Two said:

Customers (of which I'm one) will reasonably expect a reduction because they know that 5 is less than 20. The company will retain just as much money as it would have done at the time of booking because they only keep the net amount anyway.

Not if they increase their prices to match the discount

[Simpo Two]

eliot said:

Simpo Two said:

Customers (of which I'm one) will reasonably expect a reduction because they know that 5 is less than 20. The company will retain just as much money as it would have done at the time of booking because they only keep the net amount anyway.

Not if they increase their prices to match the discount

But if the deposit has already been paid, is that not a contract?

[timbo999]

anonymous said:

[redacted]

Will you start at the bottom and work your way up?

[Simpo Two]

timbo999 said:

anonymous said:

[redacted]

Will you start at the bottom and work your way up?

It would be quicker to climb to the top with a couple of painty sponges, grip sponges around pole and slide down...

[R33FAL]

Wonder when booking.com and hotels.com will reflect the new tax rate... still showing up as 20% when i looked last night...

[anonymous-user]

R33FAL said:

Wonder when booking.com and hotels.com will reflect the new tax rate... still showing up as 20% when i looked last night...

The VAT change doesn't come into effect until 15 July.

[Simpo Two]

rockin said:

The VAT change doesn't come into effect until 15 July.

This brings back the question of what part of the process is the relevant date for VAT. For example, I paid a deposit for a May holiday at the start of the year, so that will have included VAT at 20%. The holiday was later deferred to September so if the balance is due during the VAT cut period, will I pay VAT at 5% on the balance? Or did I commit to 20% when I paid the deposit? There must be a correct answer as many thousands of people will be affected.