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I've not really thought about how much it will affect me. Obviously it will increase the price of fuel, but I don't do a ton of miles and probably most of my spending is on food and household bills, with the occasional luxury or meal out thrown in. As VAT isn't charged on most food, perhaps it won't affect me too much.
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SWMBO's decided not to go into town today as some of the shops will be shut.
That means tomorrow's new pair of shoes will probably cost more.
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Most people never noticed the difference when it was reduced to 15 per cent for 13 months (cost the Labour government billions), so the same may well apply when it goes up, apart from particularly expensive items.
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>> How much will the VAT rise affect you?
Most people won't notice it, just as they did not notice the cut from 17.5% to 15% in 2009, and did not notice the rise to 17.5% in 2010. BBC and left wing politicians and newspapers will whinge for a few weeks, but that will be about it. On every £10,000 of annual expenditure subject to VAT, it will mean that instead of paying £11750 in total they will pay £12000 in total. i.e. £250 extra in a year, or less than the cost of three cigarettes a day.
What will it take to make people feel the pinch? It will be the inevitable rise in BOE interest rate - now that will be painful when it comes.
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...Most people won't notice it...
I agree, although I have noticed some consumer items seem to have gone up a fair bit recently, and will presumably go up a pound or two more due to increased VAT.
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"It will be the inevitable rise in BOE interest rate now that will be painful when it comes."
Not for me it won't. Those cheap mortgages are being paid for by savers.
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>> Not for me it won't. Those cheap mortgages are being paid for by savers.
Oh yes it will. BOE rates will be going up because inflation is going up.
Inflation effects you, directly, in your pocket.
Inflation and interest rates going up? Companies will go to the wall because their costs rise and their cheap borrowing will get them. This means less competition and dearer prices.
Ah you say, I will be all right, my saving will rise. Wrong, you really think the cash strapped thieving banks are gonna pass on the higher rates to you as a saver? Think on.
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I had a mortgage when the bank rate was 15% and interest rates were higher than that. If (or when, more likely) that returns many people will really know what belt tightening is.
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>> I had a mortgage when the bank rate was 15% and interest rates were higher
>> than that. If (or when, more likely) that returns many people will really know what
>> belt tightening is.
>>
I was advised last year (January) that returns to those rates was likely.
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>> I had a mortgage when the bank rate was 15% ..............
Me too.
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Me too - it hurt - the rate went up between my receiving a mortgage offer and actually paying for our house. Messed up my calculations, I can tell you !
Last edited by: landsker on Tue 4 Jan 11 at 19:19
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IIRC many retailers will struggle to change their Point of Sale systems to accommodate this so you might find that they'll swallow some or all of the price increase (in the end their VAT bill is just a negotiation with HMRC like the tax on their profits).
The retailers will sell at whatever price they can get and I suspect that the UK's buying public will soon forget.
As for the BOE base rate, IIRC my first mortgage was at 11%, I've lived my life 'as-if' mortgages might return to these levels and I view my home as just that - somewhere to live, so I guess I'm not overly concerned.
Last edited by: idle_chatterer on Mon 3 Jan 11 at 13:40
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I will notice it it even though I am not VAT registered I have to pay it on parts I buy for customers.
The big difference with my supplier is everything priced excluding VAT, so everything will go up 2.5% by tonight. Where as high street retailers will probably have to asborb a lot fo the cost in the short term.
I will certainly feel it but I don't think it will hurt as much as other changes will.
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>> everything will go up 2.5% by tonight.
No it won't. Something costing £100 before VAT today costs 117.5 after, and 120 tomorrow. That's a rise of 2.1%
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Oh yes it will. BOE rates will be going up because inflation is going up.
Well aware of that and interest rate should have been increased months back. The main role of the bank of England is to control inflation, something which it ignoring at the moment. If businesses cannot survive long term because they are wedded to artificially low interest rates they really should be let go to the wall.
We need to get back to something resembling financial reality, painful as it will be for some.
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Nor me. Rates need to rise for savers' sake! Not silly rates because that will have a big impact on the country. But base rates need to gradually increase at least 4% I would think. That will hurt some who over stretched mortgage wise.
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>> Rates need to rise for savers' sake! Not silly rates because that will
>> have a big impact on the country. But base rates need to gradually increase at
>> least 4% I would think. That will hurt some who over stretched mortgage wise.
>>
Yep, all the inflation from the quantitative easing (printing money) is starting to come through now. Interest rates will have to rise to keep inflation in check because we can't inflate our way out of the problems as easily as we used to (we mainly borrowed in dollars rather than pounds)
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A wealthy acquaintance from the City suggests early/mid year interest rate rises and a possibility of the Euro making 1.40 - 50!! Who knows?
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anyone in business will feel the effect of the vat increase as they will either absorb it as another cost or push it on which might mean less sales
people on fixed incomes will feel it
people who control their finances will feel it
in fact the only people who wont notice a difference are those that are paid too much to do too little in my opinion and damn there are plenty of those types around---
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Appart from fuel costs I can't see it affecting us that much - for any larger purchases the discounts most stores do far outweigh a 2%ish tax rise... and with fuel costs they've gone up far more over the last few years than this VAT rise...
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My biggest single expense is fuel and I have no way of cutting mileage so I will take a hit. I don't think the retailers will feel it that much, despite the media panic. If you plan to spend £400 on a TV I doubt if an extra twenty would put many people off.
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Won't affect us too much apart from the fuel.
Serious belt tightening here anyway.
You'd be surprised how cheaply you can live when your very own SWM is in economy mode, it's those who must have everything shiny new and with the right label who will be paying.
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Nobody will notice after a few weeks anyway as stuff like TVs tend to go down in price anyway.
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>> Nobody will notice after a few weeks anyway as stuff like TVs tend to go down in price anyway.
Nobody? Oh yes they will. Prices do not get reduced without someone having to pay for it. Retail businesses and the supply chain to retail will be squeezed even harder. Jobs will go and businesses will fail. 2.5 % doesn't sound like much but if your end of the deal can already be measured in single digit percentages then it's one hell of a lot.
This increase is quite the stupidest and most short-sighted reaction to the situation yet to manifest itself. If anyone thinks they won't be affected then think again. If business collapses we all suffer.
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I dont see it adding a great deal to my bills. Im happy to pay a little more, I doubt ill even notice, esp on petrol which fluctuates so much anyway.
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How much? You want me to quantify it?
Oh - about 2.13%, I expect.
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You wanna live. You Gotta pay.
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That was my point and it is not as if people are going to protest. The UK is a joke and just let the government walk all over us. We should be more like France or Italy.
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>> This increase is quite the stupidest and most short-sighted reaction to the situation yet to
>> manifest itself. If anyone thinks they won't be affected then think again. If business collapses
>> we all suffer.
>>
Humph, stop being a glass half empty man.
As Sturatli said in reply to your other depressive rant, VAT has been higher in EU zone without causing the collapse of industry as you fear.
www.car4play.com/forum/post/index.htm?v=e&t=4355&m=93950
Sure some marginal businesses will fail, but they deserve to fail anyway.
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I think most of the big retailers have been driving the prices up of late to absorb the increase tomorrow. I expect to see a lot of the big retailers telling us they are absorbing the increase, but in relaity they have already increased their margins.
I wonder if some of this has been driving the recent rises in inflation and aftet a few months of the new VAT rate we will see it fall a little?
I did laugh earlier - took the kids swimming and in the cafe the lady told me that they had stopped selling "kids" drinks such as fruit shoots as the VAT increase had meant they were to expensive.......get ready for people blaming anything on the VAT rise
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I think I am going to take my first hit tomorrow, need to replace a hard drive on a laptop and the drive will probably be about £1-£2 more expensive but as I round everything up/down to the nearest £5 I will probably take the hit. I suppose it could work both ways though.
The reality is still is though that the VAT increase is just a distraction so us mere citezens will be so busy moaning about tiny VAT increases we will be blind about all the cuts in hospital beds etc.
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>> us mere citezens will be so busy moaning about tiny VAT increases we will be
>> blind about all the cuts in hospital beds etc.
>>
Tell us blind people some more details, rattle.
What cuts have been announced or planned in hospital beds? Or is it your fertile imagination playing up again?
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>> The reality is still is though that the VAT increase is just a distraction so
>>
Well spotted Rattie, but keep it quiet else 'they' will put a mark against your name, you'll be an insurgent before you know it.
The VAT increase, budget cuts, tuition fees, other changes over time, all affect people in different ways and you can't beat a bit of good old fashioned greed and envy to keep the proletariat at each others throats.
As you rightly say 'distraction' has been the way of all Britains (and most others) governments of living memory, keep the masses bickering whilst those in charge and many who caused the mess just sail off into the sunset with their golden handshakes to spend as well as their ill gotten gains.
Nothing we can do about it, who do you blame, the last lot, the ones before them, the present lot?...it doesn't matter cos by the time the effects are known to even the most blinkered of lemmings, those responsible have passed the baton and slunk off to milk the post power gravy train of speeches and the Lords, you really couldn't make it up.
Not to worry carry on lads and don't forget to vote for any one of the three heads of the one party state affiliated to the EU gravy boat for ever, their replacements currently being taught at a public school near you.
Sorry for the offrant there chaps, sort of got carried away for a mo...:-)
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David Cameron will hardly notice - just inherited £300K from his late father.
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>> David Cameron will hardly notice - just inherited £300K from his late father.
>>
And why ever should he not?
Will your children inherit anything of yours?
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>> Sorry for the offrant there chaps, sort of got carried away for a mo...:-)
>>
gb - as always, blame it on others, it is never ever any thing do with us, is it? We working classes are kept in our place, sent to bog standard comprehensives, never allowed to go to public schools where we might learn how to get on the gravy train and golden handshakes, and how to rule over and keep the poor thick masses in their places.
We were born to be poor slaves to the rich masters who were born to be the ruling upper classes. No hint of politics of envy of class there then. What bitter and twisted minds we have.
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There was a story today about bed losses, not sure if it is directly related to cuts but it is the start of things to come.
menmedia.co.uk/manchestereveningnews/news/health/s/1404155_hospital_beds_axed_in_1bn_cuts
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Say it how it is John once you've figured it out, with the withering sarcasm i can't quite tell whether you're a working class lad who can't get out of his rut, or the local squire venting his spleen.
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The worrying thing is I agreed with what he said, even if he was being sarcastic!
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Bitter but true.
But there is no point on doing anything anymore, there is no point on even working because there is no work to do, there is no future full stop.
I am slightly bitter though because my income tax is due.
Who knows maybe the UK will come out of this ok and we will all be happy and merry again.
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Rattle I doubt it would be £2 extra - it shouldn't. Say the drive was £100 with VAT today. Tomorrow it will be £102.13. But are you buying a £100 laptop drive? I'd check the price tonight to see what the difference is tomorrow.
Some business might increase prices by a little more than the 2.13%.
Now if a 320Gb SATA 2.5" drive was good enough for the customer, the increase wouldn't even be a quid, e.g.
www.microdirect.co.uk/Home/Product/50030/Toshiba-320GB-2-5-inch-5400rpm-SATA
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The drive will only be £40 so pence but I have a few other things I need to get while I am there. Stuff I meant to get before the VAT rise but being too ill and for some odd reason MD were closed today.
Its daft really as it will still probably only be a couple of quid difference, not an amount worth changing plans for.
Last edited by: RattleandSmoke on Mon 3 Jan 11 at 21:42
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>> and for some odd reason MD were closed today.
Could the odd reason be that today was a bank holiday so they took the day off?
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But they were open yesterday but I suppose that was just a normal Sunday. They shut down at 2pm on NYE too, they seem to be quite good with their staff like that.
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I just see it as a hugely missed opportunity to re-start the economy. The condom on the spearhead of industry if you like. As for businesses which "deserve" to fail, oh well that's OK then isn't it, it'll be their fault then won't it? Or maybe, just maybe, there's a bit more to it than that. Maybe, some of them are still hanging on by the skin of their financial teeth when others have already gone because they have been managed with due diligence for years but straws break camel's backs sometimes.
Anyway, no doubt we will see what really happens in due course. Hope your glass is fully charged, you may need it's contents to last a bit longer than you think.
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I understand that many firms have raised prices both slightly and gradually since the 2.5% rise was announced. They can now claim that they will hold prices and/or absorb the tax increase. The only things I buy in any quantity are meals out and car fuel and having just retired and lost about 25% of my net income I shall be in Aldi/Lidl and Age Concern for my essentials and I don't think Waitrose and Armani will notice that I am not with them any more!
A belated New Year to all BTW!
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Its not just the VAT rise though is it?
With the new year come price increases anyway, add the common retail increase of 5% and the increased VAT and many people WILL notice the decrease in spare cash.
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Look on the bright side, all used cars are a year older so must be cheaper. :-)
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Including both of ours :(. I wonder how much the model year does affect the value? Mine is no longer the current plate or year, it goes so fast. In fact mine isn't even the current model anymore as the engine has been replaced.
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The reason behind the VAT increase is to instil confidence in overseas investors that the UK is not another Greece or Ireland and is capable of reducing its deficit relatively quickly.
Without that confidence and continuing investment lies even greater financial disaster. Yes the rise in VAT does constitute a risk but governments have to make decisions and on balance I think this time they made the right one. Only time will tell though
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Hidden price rises & VAT
Mitsubishi Lancer was £14999 Special Juro edition, now £16499 - that is 10% inc the VAT or 2.1% VAT & 7.9% Price Rise.
They did not sell a lot before this - just watch and see if the can hold the price rise - FORD upped prices markedly in 2008/9 only revise them down 2010.
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>> Hidden price rises & VAT
>>
I'm sure it will be just like the switch to decimal cash, a severe rounding up of prices. Rip off Britain is alive and well.
Last edited by: Old Navy on Tue 4 Jan 11 at 08:28
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I have noticed PCWORLD have put their prices up on a lot of things by £1.
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>> I have noticed PCWORLD have put their prices up on a lot of things by
>> £1.
>>
Sorry rattoo, but there is no evidence for your claim that I can see. All their prices still end in the magic "9" price point figure.
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Have a look at the Kaspersky Internet Security, was £22.99 yesterday now it is 23.99. I am sure a lot of the 'sale' items will still be the same price.
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>> All their prices still end in the magic "9" price point figure.
I was told that any prices that end in 97p (eg £24.97) are end of line products that won't be restocked.
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>> I was told that any prices that end in 97p (eg £24.97) are end of
>> line products that won't be restocked.
>>
That is correct. items priced ending in 97p indicate that they are "manager's special" and likely to be store specific. Returned goods with that that price on a receipt will flag up that fact.
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I see MacBook Pros on Apple's site now start from £1,020, instead of £995.
Trust them to slap the VAT on straight away.
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And they have rounded it up to £1020 too. Should be £1016.17
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I am sure a lot of people might start protesting about stores blatingly rounding up prices when it is none essential items.
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I think it was the Chairman of John Lewis who was interviewed on Sky News this morning.
He was asked how much the VAT increase is going to affect sales figures in his stores.
He replied that retailers have always had to deal with varying costs. It's nothing new. Compared to the loss of value of Sterling in 4Q 2009 a 2.5% rise in VAT is much easier to deal with. (Sterling lost approx 25% of its value after The BoE announced they were going to the printing presses).
The 5% CPI in China and the inflationary effects of printing Sterling are also likely to cause problems.
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Some prices are going up fast anyway, so the VAT increase may well not be apparent.
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Absolute essentials are zero-rated. Things like cars, big TVs, and other "luxury" items have VAT on them because it's accepted, socially, that we're prepared to pay for them. The advice to retailers was to increase prices back in September, so they can "keep them the same" after the VAT rise to give an illusion of a discount.
Fortunately, the VAT rise won't affect me very much (I earn sufficient that it's not really a problem) and I'm struggling to see how the opposition has come up with the extra £600 a year cost on the poorest families.
IMHO, a much fairer system would be to reinstate the 10% tax bracket and shove VAT up to 25%.
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>>a much fairer system
For me, I think the current dire situation left by Nu-Lab is a missed opportunity. A missed opportunity to renegotiate the extent of the state. In my opinion, the state gets involved in lots of things it should simply not be involved in. Health, education, and expensively on and on.
There is an irreducible minimum, things like defence and law and order which the state must look after. Beyond this irreducible minimum everything else we pay the state to do is just an expensive option - like the tick box list on a car spec sheet - politicians like to offer us these options, but, they don't like reminding us that we must pay for them.
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>>...I'm struggling to see how the opposition has come up with the extra £600 a year cost on the poorest families...
Agreed completely; the rise from 17.5% to 20% equates to 2.1% more on the price of a standard rated vatable items.
To increase the cost by £600 means that the poorest families must be spending £28,500 on vatable items (£600 / 2.1%); completely garbage from the oposition IMHO. But then, finances were never their strong point ;-)
Peter
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>>...I'm struggling to see how the opposition has come up with the extra £600 a year cost on the poorest families...
Anyone who believes in the Labour Party will believe anything at all on numbers. Why do you think the education system has been dumbed down?
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The output of our largely dismal education system have been told, and believe, that VAT has gone up by 2.5%. It has gone by 2.5%, from 17.5% to 20% which is a 14.28% increase. Sorry if someone has already pointed this out BTW!
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How much will the VAT rise affect you? - bathtub tom
