new VAT rate- is it going be that bad?

[Paul]

Hi All! I wonder if new vat rate going to change what we doing now. All over the tele and radio I can here "beat the vat!!! beat the vat" whats the point? I mean whats the point other then marketing?
vat rate is now 17,5% and its going to be 20% soon. I know its change all prices in the shops etc but is it worth to rush and buy something in panic without thinking?? only to save couple of £££? Its fine when you want to buy ferrari or other expensive toy but is it as importand when buying a heat press, new tele or washing mashine? its going be only few quid more. or shops will use that as a excuse only to rise they prices more then vat incrase? what do you all think??

ps. hope this post has some sens in it :) if you dont understand then I try to re-type it again

[accdave]

On a single item maybe it won't make much difference ( well maybe the new Ferrari might be a temptation to beat the rise ). The problem is most manufacturers and suppliers have also increased prices for clothing in January so it's a double whammy for many of us.

[bms]

I'm sure it is all psycological at the moment. It was the same when VAT came down to 15% a couple of years ago.

I remember seeing all the strange prices when that happened - instead of being £9.99 the VAT reduction brough the price down to £9.78. Didn't last long though did it and soon enough prices were back up to the £9.99 ceiling. I think the same will happen when VAT goes up. Either the £9.99 item will become £10.20 or the retailers will realise that a price over £10 seems a lot more than £9.99 so the prices will fall back again over time.

On the high street I think the "psycologically correct" will prevail - but they might end up being £10.99 rather than £9.99!

[DREAMGLASS]

Fiver on a freezer, tenner on a big screen tv, less than five pence on a blank cotton tee, perhaps 3p on a blank mug. I really don't think it is going to make that much difference to the economy. The country needs to raise urgent funds after all.

[JSR]

Most of the retailers who make the big adverts try to make out that it's a bigger deal than it is. It sounds more if you think in terms of 17.5 going up to 20 - because 2.5 of 17.5 is about 14%, and that's a big chunk.

It takes the average person a second thought to realise that the 2.5 increase is in 100 - not in 17.5 - and 2.5% is a much smaller increase. An item that was 85p before VAT cost £1.00 last year, and £1.02 this year. That's hardly wallet-busting in itself.

These adverts suggest that millions of people must fall for this advertising con. They all advertise January/Winter sales with "up to 50% off" and then urge you on with the extra "buy now to beat the VAT rise". Well, if that sofa is 50% off - does another 2.5% really matter? Does it?

I do think, though, that for small items, there will be a lot more people buying from the likes of 7dayshop.com, Play.com, and Amazon's "prefered merchant". All of these places (and others) exploit the VAT loophole of selling from the Channel Islands - so their prices won't go up, while UK-based sellers will have to put their prices up. Putting home-grown retailers out of business won't help the economy.

What will hurt is that certain Royal Mail posting options will be subject to VAT after January 31st. As these are currently VAT exempt, those prices will go up by a staggering 20% - to be followed by the Royal Mail's annual increase in April. People using those services will definitely notice the VAT.

[accdave]

less than five pence on a blank cotton tee

If you are selling a printed tee, there's the vat on the tee, the vat on the flex, the vat on the delivery costs and the increase of the base price of the tee itself.

[DREAMGLASS]

If you are selling a printed tee, there's the vat on the tee, the vat on the flex, the vat on the delivery costs and the increase of the base price of the tee itself.

Whilst that is true, it is perhaps less catastrophic than the folks in the public sector that will be losing their ENTIRE incomes over the next two or three years. The country is in deep financial doo doos and the increase in VAT is going to affect all businesses, but what do you do about it? The government dictate policies and we all have to go along with them, however unpopular they may be.