New VAT cut

STRAWB

Hi
We are on a fixed VAT rate of 6% as we are in the retail sales sector will this make any difference to us a nice cut would be great!!! But i doubt it.

JasonLVC

It may even be worse for you.

If you are on a fixed VAT rate of 6% then I assume you are on the Flat Rate Scheme.

"Retailing that is not listed elsewhere" was 6% but from 01 December 2008, that fixed rate drops to 5.5%

The link is here :-

http://www.hmrc.gov.uk/pbr2008/vat-guide-det.pdf

Go to Appendix E (page 43)

STRAWB

how is that bad for me instead of giving the VAT man 6% i will only be giving him 5.5% thats better for me!

Pennywise

STRAWB wrote: »

how is that bad for me instead of giving the VAT man 6% i will only be giving him 5.5% thats better for me!

Not when you've reduced your selling prices due to the 2.5% vat cut it isn't!

clunkfaeoffshore

Seems most people/small companies on the fixed rate scheme (myself included) are worse off due to the tax cut, as the cut in their payments is not as high as the cut in their "gross" earnings. My new rate is 11.5%, down from 13%, which means the difference kept by the company to cover the overheads etc. that are what the fixed rate scheme are designed to simplify drops by .45% of earnings (net of VAT). Bit sad when the cut introduces more costs. Previously your overhead allowance on 6% fixed rate would have been 11.5% of 117.5% of net earnings (13.5125% of earnings NET of VAT). Now it's 9.5% of 115% of net earnings (10.925% of earnings NET of VAT). Can do with less tax CUTS like this, and a sure fire excuse for not passing on any "savings" as you don't actually get any.