VAT change question...

[minghis]

I hear people saying that now things are 2.5% cheaper due to the reduction in VAT from 17.5 to 15%, but is this right?

If there has been a reduction in the VAT rate then surely the saving is 2.5% of just the original VAT content, making things not 2.5% cheaper?

My reckoning is that is something was £117.50 then the VAT was £17.50 and the new price would be simply £115.00.

£117.50 less 2.5% is £114.56, so are shopkeepers getting it right or am I having brain fade here - I reckon that if they aren't careful they'll be giving away their margin rather than just the different VAT rate.

Obviously not really a problem on low cost stuff, but if something was selling for say £500 and they simply take 2.5% off they'll be doing themselves out of a fair bit, £12.50 instead of £10.63 = £1.87 lost margin.

Discuss?

[kippax]

Works out at 2.2% cheaper

H

[esselte]

I think shops should be reducing prices by 2.13% (check my maths 115/117.5*100=97.87)

[spikeyhead]

kippax said:

Works out at 2.2% cheaper

H

It would be but my VAT receipt for this mornings petrol still showed they were charging 17.5% VAT.

The manager wasn't there, when I next see him he'll be paying me some pennies.

[zelbo]

2.13% is right

Its a total ballache as far as i am concerned, Labour really are a bunch of wkers

[esselte]

spikeyhead said:

kippax said:

Works out at 2.2% cheaper

H

It would be but my VAT receipt for this mornings petrol still showed they were charging 17.5% VAT.

The manager wasn't there, when I next see him he'll be paying me some pennies.

There's never been a guarantee that retailers will pass the cut on instaed of adding to their profits...

[spikeyhead]

esselte said:

spikeyhead said:

kippax said:

Works out at 2.2% cheaper

H

It would be but my VAT receipt for this mornings petrol still showed they were charging 17.5% VAT.

The manager wasn't there, when I next see him he'll be paying me some pennies.

There's never been a guarantee that retailers will pass the cut on instaed of adding to their profits...

You're missing the point, he wasn't not passing on the cut, he was claiming, in writing, that the VAT was still 17.5%!

[Jockstar205]

Was there not some kind of get-out clause for petrol staying the same or an alternative tax to keep it overall the same price?

I'm sure it wasn't to change. After all, that might have helped us

[esselte]

Jockstar205 said:

Was there not some kind of get-out clause for petrol staying the same or an alternative tax to keep it overall the same price?

I'm sure it wasn't to change. After all, that might have helped us

VAT is reduced but duty went up to cover the difference...wonder what will happen in 2010 when VAT goes back up to who knows what %age?

[Eric Mc]

Traders are not required to pass on the VAT reduction to consumers. Some may, some may not.

[cjs]

Eric Mc said:

Traders are not required to pass on the VAT reduction to consumers. Some may, some may not.

But they should still show the correct VAT rate , 15%, on the receipt surely?

[mrmaggit]

kippax said:

Works out at 2.2% cheaper

H

Strewth, haven't seen you on here for a while. Welcome back.

[Westy Pre-Lit]

zelbo said:

Its a total ballache as far as i am concerned, Labour really are a bunch of wkers

All it's done has caused business one bloody great headache and will cost millions to implement. If the rate change was here to stay then fair enough, but for it all to change again in a year or so it makes my piss literally steam.

Are we lowering our prices....NO!!!!!!!!!!!!! and I'm surprised anybody is cutting their prices. I bet businesses with catalogues are well happy.

[simonrockman]

I disagree. It's all done to create a boom next Christmas when things are due to go up. "I must spend now or it will cost me more". The fact that the more is trivial doesn't matter to the psyche.

Simon

[andy-xr]

cjs said:

Eric Mc said:

Traders are not required to pass on the VAT reduction to consumers. Some may, some may not.

But they should still show the correct VAT rate , 15%, on the receipt surely?

Which is interesting, as you'll find out once you've got the fuel. This annoys me like the supermarkets charging you for the carrier bags once you've bagged everything up and it's in your trolley

[Westy Pre-Lit]

simonrockman said:

I disagree. It's all done to create a boom next Christmas when things are due to go up.

Simon

Boom....... it will cause a blip by numbskulls.

[micky g]

Eric Mc said:

Traders are not required to pass on the VAT reduction to consumers. Some may, some may not.

Could you clarify that Eric please.

[Westy Pre-Lit]

micky g said:

Eric Mc said:

Traders are not required to pass on the VAT reduction to consumers. Some may, some may not.

Could you clarify that Eric please.

Yeah i noticed this. They are required to pass it on, but like us, will just add a bit on (cost before tax) to equal it out so no price change.

Don't worry though, the tossers will claw it back when companies pay their corporation tax bill.

Edited by Westy Pre-Lit on Tuesday 2nd December 08:32

[kippax]

mrmaggit said:

kippax said:

Works out at 2.2% cheaper

H

Strewth, haven't seen you on here for a while. Welcome back.

Thanks but not been anywhere just don't contribute as much since I sold the Tuscan.

H