From tomorrow, the 4th January 2011, the standard rate of VAT in the UK is set to rise by 2.5% from 17.5% to 20%. The rise isn’t temporary (as was the decrease to 15% in 2008), but instead a permanent change to the taxation system announced in this year’s emergency budget.
This increase is one of the ways the Government intends to reduce the national debt by clawing back an estimated £13bn per year.
Unfortunately, as VAT is a tax paid on most goods and services, the increase is almost completely unavoidable. In simple terms, from 4 January 2011, the majority of purchases in the UK will become more expensive. Economists have predicted it will cost the average middle class family up to £448 per year, £33 of which will be the extra we’ll have to spend on our supermarket shopping.
The VAT basics:
‘Value Added Tax’ is charged on the majority of goods and services provided by VAT-registered businesses in the UK. It is also charged on some goods imported from countries outside the UK, both EU and non-EU.
Standard Rate is the VAT paid on most goods and services in the UK. Currently standard rate is 17.5% but is set to increase to 20% from 4th January 2011.
Reduced Rate is the VAT charged on things like children’s car seats and gas and electricity for the home. Reduced rate VAT is currently at 5%.
Zero Rate – examples of zero-rated goods are most food items, books, newspapers and magazines, children’s clothes and goods provided in special circumstances i.e. equipment for the disabled.
Goods purchased in shops have the VAT included in the price; no tax is added to the price at the checkout. Any product or service advertised at the general public is under legal obligation to include VAT in the listed selling price. Any product or service advertised at consumers and businesses in catalogues, outlets etc will show a VAT inclusive price but may also show price without VAT.
Prices aimed purely at businesses are generally shown with no VAT included and then charged on top of the price listed.
An everyday example of this would be on a petrol receipt, where the VAT is added and then the total of the two which is the price we pay at the kiosk. These breakdowns are not usually shown on retail bills and receipts, however, invoices from VAT-registered suppliers (painters, builders, plumbers etc.) are legally obliged to show the amount of VAT charged and must also show their nine-digit VAT Registration Number.
cba Partnership – 72 Lairgate, Beverley, East Yorkshire, HU17 8EU – 01482 881919
cba Partnership – 72 Lairgate, Beverley, East Yorkshire, HU17 8EU – 01482 881919
cba Partnership – 72 Lairgate, Beverley, East Yorkshire, HU17 8EU – 01482 881919
From – EDWINA JACKSON
Proprietor of LEGENDS/FANTASIA -Fancy Dress Hire and Retro & Vintage clothing sales – 11 LADYGATE, BEVERLEY,HU178BH,Tel: 01482 887293
As a small business owner who is not VAT registered ,I still pay vat on goods purchased so this will affect the amount of goods I will be stocking in the FANCY DRESS ACCESSORIES department ; As well as this increase my suppliers have already increased prices on top of the catalogue price to compensate for the low value of the pound, as the goods are mostly sourced from the far east and this has affected their buying power . Now we will also see an increase in haulage fuel prices so I have a feeling the prices will also increase even more due to this.
With all this going on I am looking towards not purchasing so many goods that will sit on the shelf until sold ……. Instead I am considering offering a CLOTHING ALTERATION SERVICE to customers who will be wanting to extend the life of their existing wardrobe and having favourite garments recycled by re-styling ,re-fashioning , shortening or taking the seams in – this service will also compliment my VINTAGE & RETRO clothing sales as I am able to offer alterations to garments for sale and to my customers requirements .It will also extend to my FANCY DRESS HIRE business which has now moved to the upper floor of my premises ,I will be able to offer more bespoke costumes made to order —
I am sorry to have to reduce my product lines available but the cost of having products sitting on the shelf waiting to be sold is now becoming a worrying proposition and as most items are now only available in minimum quantities of 12 `s it is the only way I can see to remain in business – I will still stock WIGS,DISGUISES,FACE PAINTS and a small assortment of accessories ( that do not have minimum quantities ) to compliment my HIRE COSTUMES .
This VAT increase is going to make or break many of the small businesses -.
I just hope I can hold my own business in tact .