in UK holidays, days out & entertainments
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Hi I’m due to pay the balance on my cottage via a cottage holiday rental company on Wednesday I have rang the company to check the payment will be reduced to 5% vat and they said I wasn’t paying vat which I don’t think is true just because they don’t show it doesn’t mean it’s not in the price j
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If they don't want to, they don't have to. Also bear in mind the tax point is when you paid - and it's not retrospective, so if booked before the rate drops you get nothing anyway.
With regards to "they can choose to pass the saving on or not", to be pedantic that's not technically true, VAT is collected by a business on behalf of HMRC and cannot be retained by the business. However, what they can do is increase their ex-VAT prices the day the VAT change comes in, so the end price for retail sales is effectively the same.
A company does not have to pass on this VAT cut. You will no doubt have booked a holiday at an agreed amount inclusive of VAT.
This is a business support measure, a business can choose to pass on the VAT to the consumer in the hope that drums up more business OR they can choose to bank the savings (by reducing VAT to 5% and increasing their net prices) to increase sales income now.
The decision will likely be based on what their competitors do, their financial position and the administration costs of passing on the savings (think web page updates, marketing and admin changes in addition to system changes needed to manage this reduction).