20% VAT - How will it impact you & Did you know?

MrsRogers

I have been thinking recently how the increase in VAT to 20% is going to affect out household.

It occurred to me I wasn't really that 'up' on VAT so have started to do a very small amount of research and then thought wouldn't it be a good idea to have somewhere we can all share our knowledge.

Some of the things I had no idea were subject to VAT.. :eek:

I have found the below off the 'Which Web Site' which is helpful

What you pay VAT on
VAT is a tax on consumer spending, which is automatically added to the goods you buy in shops and the services you purchase. The tax is charged on a huge range of items – from clothes, gadgets and big ticket electrical items to meals out in restaurants.

The vast majority of the things you pay for will be subject to VAT at the standard rate. This is currently 17.5%, but is due to increase to 20% on 4 January 2011. Unfortunately, this means most things are going to be more expensive next year, unless retailers absorb the VAT hike.

However, the rules around VAT are devilishly difficult to understand. Not all purchases or transactions are subject to VAT, while others have VAT applied to them at a reduced rate.

Reduced-rate VAT
In the past, VAT has been seen as a tax on ‘luxuries’ – yet many of the items subject to the tax are viewed by most of us as essentials.

For example, women’s sanitary products, maternity pads and domestic gas and electricity all have VAT charged on them at a reduced rate. This is currently 5%.

Other goods and services that are subject to reduced-rate VAT include:

Energy-saving materials installed in personal or business premises, such as solar panels;
Mobility aids for the elderly;
Smoking cessation materials such as nicotine patches and gum;
Heating oil and solid fuel for domestic and residential use;
Children’s car seats.
VAT-free
Meanwhile, other items are zero-rated for VAT or are exempt from the tax. This means consumers don’t have to pay VAT on them.

Items that are zero-rated for VAT include:

Baby wear, children’s clothing and children’s footwear;
Books, newspapers and magazines;
Printed or copied music;
Caravans (depending on their size);
Water supplied to homes;
Donated goods sold in charity shops.
Goods and services that are exempt from VAT include:

Betting and gaming;
Bingo and lotteries;
Physical education and sports activities;
Burial or cremation of dead people, or burial at sea;
Funeral plans written under contract of insurance;
Medical treatment and health care;
Postage stamps (UK and Isle of Man);
Financial services such as loans and other forms of credit;
Insurance services.

Penelope_Penguin

As this isn;t an Old Style topic, I'll move it to the Tax Board.

Hi, Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere (please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL].

lincroft1710

It has always surprised me how much people moan about Council Tax but rarely about VAT. If CT bills were going up by 14% (approx percentage VAT increase from 17.5 to 20%) people would be up in arms.

le_loup

People will moan about the increase ... even though the same people said ADs reduction to 15% was useless!
Funny old world.

yelf

The biggest impact will be fuel - bearing in mind the Gvnmt's added further increases in duty. Add this is to the response from the union of the publici spending review (the pathetic out-dated Unions will appraently respond early new year) - and a rturn to the 2000 blockades is on the cards

Phoenixandre

This is from an article on thisismoney website. It lists snacks that will inscrease with VAT and
possible alternatives that are VAT exempt so will not increase in price with the VAT rate change:
Products where VAT is payable
Wholly or partly chocolate coated biscuits
Gingerbread man decorated with chocolate (unless this amounts to no more than two chocolate eyes!)
Arctic Rolls
Sorbet
Chocolate bar
Nuts or fruits covered in chocolate or yogurt
Flavourings for milk shake
Potato crisps
Roasted or salted nuts without shells


...and the VAT-exempt alternatives
Chocolate chip biscuits
Jaffa cakes
Cream Gateaux
Mousse
Chocolate spread
Toffee apples
Milkshake
Tortilla or corn chips
Roasted or salted nuts supplied in shells e.g. monkey nuts, pistachios

zorber

yelf wrote: »

The biggest impact will be fuel - bearing in mind the Gvnmt's added further increases in duty. Add this is to the response from the union of the publici spending review (the pathetic out-dated Unions will appraently respond early new year) - and a rturn to the 2000 blockades is on the cards

i hope some thing is done. I cant stand the way every politician seems to think the motorist can pay more for driving. If i could move to france i would this country has be come a joke.

I will have to cut back on spending to pay for the things that will go up in price.

By the way any retailer tells you they are absorbing the vat increase and not putting the prices up, dont beleive them. I know some prices have started to go up already so this marketing ploy can be carried out

MrsRogers

zorber wrote: »

I know some prices have started to go up already so this marketing ploy can be carried out

That makes so much sense I have seen stuff in the supermarket go up already. :mad:

I just hope they don't take advantage and put them up to stupid amounts!