Emergency Budget: VAT to rise

JasonLVC

zierisaver wrote: »

The product would be considered part of the luxury market, therefore it is not that other companies will pick up on the sales, but that a price over £100 will adversely affect sales.

Therefore it is likely that the price will have to remain £99 and a larger proportion of the sale price being handed to the government in VAT. Thus the cost of £30k isn't in lost sales, but in lost profit.

A product aimed at the luxury market but price sensitive to less than £100?

If priced maintained at £99 then you just increase the volume of sales to maintain the same profit level or reduce your overhead costs.

I'm not being difficult with you so sorry if it appears that way, just that I don't understand why it is the fault of VAT if a business chooses to retain a price point that is not profitable for it.

In effect your business is saying "..we cannot increase prices ever, ever and so our profit margins will only be determined by future governments setting VAT rates favourable to us". VAT is not a cost to any business in a level playing field. Business strategy may dictate a price point but the business needs to adapt to that change as it would any market change.

JasonLVC

North_Star wrote: »

Its UP , Its DOWN , Its Up , Its DOWN............ VAT or one of the many House of Commons pillocks trousers , like one poster originally said this increase to 20% is now compensating for the 15% previously, the industry I deal with has many self employed workers and this increase in VAT may just put a large % of them into the other drain on the UK which is jobseekers and other benefits now.

Why?

Self employed workers can earn upto £70,000 per year turnover before registering for VAT. So to be at the VAT registeration level suggests a trader with a fair sized business.

Yes, a builder who charges VAT will get less work than a builder who doesn;t charge VAT, but then that non-VAT charging builder is either a crook or has turnover less than £70k so is weak competition at best.

Many self employed consultants/advisors/IT bods register for VAT as they can actually make additional profits from it. If the business was viable when VAT was 15% or 17.5% why is a tiny 2.5% increase somehow equalling armageddon?

artha

JasonLVC wrote: »

The 'mess' is the government debt and spending deficit. The cause may be apportioned at the door of 'bankers' but that bubble was going to burst eventually, it was inevitable.

But the debt and deficit we've clocked up as a country over the 'good' years before the economic collapse is the current problem.

We're so focused on blaming bankers and 'global scapegoating but forget that if the UK had lower debts and spending commitments it could easily cope with reduced tax income during the recession - but the UK had already maxed out on 2 credit cards and there's no money left to pay off the bills. Hence the need for such harsh cuts.

As I said in my post I was not defending labour and therefore not taking a political stance. I agree that the way this country was able to cope with the recession was influenced by the actions and policies of governments of all shades. I think Gordon Brown was handed a poison chalice by Tony Blair. What I was trying to get off my chest was the views I've heard from many uninformed people (not here, to stop that in its tracks) who never see any more news than a red top headline and think that the current financial situation is totally the fault of the Labour Government

BexTech

I've already started buying certain goods again from other EU countries where the items are cheaper sometimes even when their VAT rate was higher, for smaller under £18 items I look outside the EU for.

HanSpan

I don't have an issue with VAT going up, rather what its levied on. I'd actually have no problem with it going up higher if it really was only on non-essentials.

I also object to being misled (not surprised of course, just irritated). I distinctly remember the libdems saying they wouldn't up VAT, and the conservatives refusing to say if they would - but implying it wasn't something they planned to do in a hurry.

I haven't managed to find anythign about VAT on gas and electricity - does anyone know if that is to stay at 5%?

annsara

flashnazia wrote: »

I agree that cutting the deficit is good for the country but what is good about penalising workers by taxing us to death?
We already pay £31 of every £100 we earn in NI and income tax. If we spend what's left VAT deduction will only leave us with £55.20!

I'm surprised nobody has commented on the £15,000 that the government spent replenishing the wine cellar the other day no doubt we the ordinary people will be paying for:mad:

JasonLVC

HanSpan wrote: »

I don't have an issue with VAT going up, rather what its levied on. I'd actually have no problem with it going up higher if it really was only on non-essentials.

I also object to being misled (not surprised of course, just irritated). I distinctly remember the libdems saying they wouldn't up VAT, and the conservatives refusing to say if they would - but implying it wasn't something they planned to do in a hurry.

I haven't managed to find anythign about VAT on gas and electricity - does anyone know if that is to stay at 5%?

Only standard rate (17.5%) is going up to 20%. The other rates (zero rate and reduced rate of 5%) are all staying exactly as they were and nothing is being taken from those two rates and moved into the standard rate - so shouldn't be THAT big a cost to the average household.

parkersages

78mjt wrote: »

This won't hit consumers, it will hit small businesses. Think of any business that prices its product psychologically below a certain price point - say at £99.99. Their prices will have to go up to £102.50 to make up for the VAT, which they obviously won't do.
Therefore they'll lose £2.50 for every sale that they make. This might not sound like a lot, but if they sell say 10,000 units a month and work on small margins it could kill them. The alternative? Put their prices up and lose sales - it's a lose/lose situation.

Maybe some of the stupid 99p prices will disappear then. Who do they think they are fooling. Some while ago M&S took the sensible step of rounding their prices off to an even pound on clothes and it is about time others did so too. Including Petrol with their ridiculous .9p on price per litre.

parkersages

artha wrote: »

As I said in my post I was not defending labour and therefore not taking a political stance. I agree that the way this country was able to cope with the recession was influenced by the actions and policies of governments of all shades. I think Gordon Brown was handed a poison chalice by Tony Blair. What I was trying to get off my chest was the views I've heard from many uninformed people (not here, to stop that in its tracks) who never see any more news than a red top headline and think that the current financial situation is totally the fault of the Labour Government

Handed poisioned chalice by Blair? I wonder who the Chancellor was. If you as an individual spent every penny while you were earning well and then lost your job and had nothing saved, I wonder how sensible people would think you had been

bubbles0169

hi could someone help me please!
we're getting married in sept 2012 and our venue are charging £6500 with VAT @ 17.5%
so what will the bill be in 2012 aslong as VAT is @ 20%
could you tell me how to work it out as i know its not just adding another 2.5% on