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pre budget - VAT going down 2.5p on Monday

edited November 2008 in Not Sports Related
Hmm increase upper band to 45% on earners over 150k, why so high? Why not 80k?? it raises tuppence..

Increase NI by .5% i.e. kicking middle earners and employers in the nuts could be worse I guess and not till 2011 though if I read it right

On VAT it seems on most things (except booze, fags fuel, there will be a reduction in VAT/Government duties), so hold back on the Christmas shopping folks.

Budget to balance in 2015/16 apparently.


http://news.bbc.co.uk/1/hi/uk_politics/7745340.stm

Comments

  • shock horror - Labour taxing the wealthy. Whatever next
  • [cite]Posted By: Swisdom[/cite]shock horror - Labour taxing the wealthy. Whatever next
    and employers/business. T0ssers.
  • ...and, if I heard it right, just as you thought petrol prices were going to come down again, the bugger's putting petrol duty up.
    As the venerable V Cable asks on the 2.5% VAT reduction: does anyone serioulsy think that £5 off a £200 TV or 25p off a restaurant bill is going to make a difference?
    We're doomed!......DOOMED!!!
  • edited November 2008
    well not really, a pittance of tax raised from the wealthy in this increase, more coming from middle earners who need to earn that much to live in the southeast. Earning over 150k is pretty obscene anyway in my view, most earners at that level dodge taxes anyway, and I'm sure they can cope with 5p increase.
  • edited November 2008
    I don't disagree with the fuel duty its to offset the VAT reduction, we don't need to increase consumption of those items.

    However doing the VAT reduction from Monday seems a bit silly, now the retail industry will lose a big Christmas shopping day in deserted shops over the weekend.
  • edited November 2008
    [cite]Posted By: razil[/cite]I don't disagree with the fuel duty its to offset the VAT reduction, we don't need to increase consumption of those items.

    However doing the VAT reduction from Monday seems a bit silly, now the retail industry will lose a big Christmas shopping day in deserted shops over the weekend.

    VAT payment for Aug to Oct falls due at end of November so maybe that is why. So now I'm going to have to work out two different rates for the next quarter and no doubt re-do a load of invoices.

    Any idea what the new flat rate scheme payments will be?
  • edited November 2008
    not a clue dude, I'm more politic than finance. Just occurs that the shops will be much emptier than they might have been on Saturday now due to this.
  • question for finance peeps

    If you have agreed to purchase something by contract or deposit, but don't receive the item as paid until after the cut/pay the final amount, is one entitled to the VAT reduction?

    Cheers

    R
  • It seems to me that you either

    a) give a fiscal stimulus now knowing that later you will need to put up taxes and cut public expenditure to bring back towards balance. This may lessen the immediate pain but the patient may take longer to recover. (Labour -VAT reduction and other targetted measures with later tax rises, or Lib Dem - cut in basic rate of income tax plus other targetted measures, plus selective tax rises, or other major industrial countries with their own measures)

    b) don't give a fiscal stimulus and tinker with support for business and other measures. This produces acute pain in the short-term but the patient improves quicker. (Tory approach - and the previous orthodoxy of old Labour under Callaghan/Healy, successive Thatcherite chancellors and New Labour under Brown until he discovered bust as well as boom)

    You pays your money and you takes your chance. For me, on balance I'd rather do something rather than nothing, so I favour the approach taken of fiscal stimulus now but I'd rather see a cut in basic rates of tax rather than VAT.
  • its also interesting that they implement a deflationary measure, and yet are worried about deflation... wouldn't it be better to bring confidence and consumption less directly?
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  • A cut in basic rates of tax helps those earning and receiving higher pension awards.

    Cutting VAT applies right across the population from kids to the elderly ...ie, anyone old enough to go into a shop regardless of income.
  • [cite]Posted By: razil[/cite]question for finance peeps

    If you have agreed to purchase something by contract or deposit, but don't receive the item as paid until after the cut/pay the final amount, is one entitled to the VAT reduction?

    Cheers

    R

    There is supposed to be an official communique from HMR&C this week. The most likely scenario will be that the VAT rate that applies will be the rate which applies at the VAT date shown on the invoice. (The VAT date being either specified as such or the date of the invoice if no VAT date is mentioned). Anything with a VAT date before 1/12/08 will be at 17.5% (assuming it's standard rated) Anything with a VAT Date of 1/12/08 of after will be at the 15% rate. Thus if you haven't yet received the invoice, you should be charged the lower rate if its invoiced to you on or after 1/12/08. If you have just got the invoice, ask them if they will re-issue it on or after 1/12/08. If you paid a deposit, before 1/12/08, it depends whether you received an official VAT invoice for that deposit, or whether the VAT invoice is issued based on the final price paid once you've paid the balance. It will then be down to the date as mentioned earlier.

    I've run my own business but am not a tax expert. You should get expert advice if you are really concerned,
  • edited November 2008
    [cite]Posted By: Oggy Red[/cite]A cut in basic rates of tax helps those earning and receiving higher pension awards.

    Cutting VAT applies right across the population from kids to the elderly ...ie, anyone old enough to go into a shop regardless of income.
    Indeed and they may choose to save the cut or to spend it abroad, which is anothe reason why targetting VAT for a year is good
  • [cite]Posted By: Oggy Red[/cite]A cut in basic rates of tax helps those earning and receiving higher pension awards.

    Cutting VAT applies right across the population from kids to the elderly ...ie, anyone old enough to go into a shop regardless of income.

    The problem is Oggy, will most businesses reduce their prices (and by the way it won't be by 2.5% - you do the math, it will be by 2.1%)? In my business my pricing policy was to sell everything with, 19p 29p 39p 49p etc. Would I change any of those prices? Not many. If I sold a saw for £6.79, am I going to reduce that price by 2.1%? No because as a small business, I didn't sell that many and certainly not to the same person. On the other hand I sold pet food and that was sold on a repeat basis, therefore I'd probably pass the reduction on. (I have sold that business now but I know how minds will work).

    It's different say with major projects for which invoices are issued with VAT dates. In those cases, VAT will need to be charged accordingly.
  • What about penny sweets, what do they become?
  • [cite]Posted By: bingaddick[/cite]
    [cite]Posted By: Oggy Red[/cite]A cut in basic rates of tax helps those earning and receiving higher pension awards.

    Cutting VAT applies right across the population from kids to the elderly ...ie, anyone old enough to go into a shop regardless of income.

    The problem is Oggy, will most businesses reduce their prices (and by the way it won't be by 2.5% - you do the math, it will be by 2.1%)? In my business my pricing policy was to sell everything with, 19p 29p 39p 49p etc. Would I change any of those prices? Not many. If I sold a saw for £6.79, am I going to reduce that price by 2.1%? No because as a small business, I didn't sell that many and certainly not to the same person. On the other hand I sold pet food and that was sold on a repeat basis, therefore I'd probably pass the reduction on. (I have sold that business now but I know how minds will work).

    It's different say with major projects for which invoices are issued with VAT dates. In those cases, VAT will need to be charged accordingly.
    I imagine because of pricing policies some prices will come down by more than 2.5% and some will stay the same, of course business can choose to keep all prices as they are to help their margins and keep them afloat, not necessarily wise for many businesses in the current climate but either way it helps a bit.
  • [cite]Posted By: WSS[/cite]What about penny sweets, what do they become?

    Blackjacks...... 4 for a penny, when I was a kiddie winkle.

    ;o)
  • [cite]Posted By: WSS[/cite]What about penny sweets, what do they become?
    buy thirty four get one free (BTFGOF)
  • [cite]Posted By: Salad[/cite]
    [cite]Posted By: Oggy Red[/cite]A cut in basic rates of tax helps those earning and receiving higher pension awards.

    Cutting VAT applies right across the population from kids to the elderly ...ie, anyone old enough to go into a shop regardless of income.
    Indeed and they may choose to save the cut or to spend it abroad, which is anothe reason why targetting VAT for a year is good

    The thing is fuel has 5% VAT on it (not affected), food is zero rated as are things like childrens clothes. The VAT cut will substantially fall on discretionary spending and will line the pockets of people who have spare cash anyway. An Income tax cut targetting the less well off coupled with increases in PA many of those in the bottom slice of income out of tax altogther will go straight into spending in my view. As I said in my earlier post, many businesses will not pass on the VAT cut in all their pricing.

    Hence why I favour income tax reductions for the lower paid. (It also will deal with the unfairness of the tax system in respect of marginal tax rates at the bottom end of the income scale).
  • But bing there are lots of other promising nods to that direction such as pension payments up, plus £60 to all pensioners, pension and child credit increase brought forward.
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  • i thought we were being advised to watch what we spend due to us entering into a resession.

    yet the weird looking bloke with white hair and black eyebrows is asking and activly encouraging you to spend the savings in the high street.


    i wont be spending any savings that we make,

    this is dangerous times and this is a dangerous solution.

    they are taking us all for idiots this mob
  • edited November 2008
    VAT is an EU tax.

    15% is as low as he can take it without begging to our Masters in Brussels.

    Furthermore once something has been brought into the scope of VAT it cannot be removed from it without the permission of our Masters in Brussels. Therefore scrapping the 5% VAT on Electricity and Gas bills which would be of real assistance to the Poor is a big no no.

    The political fall out when our Masters say no and there is nothing we can do (unless we grow some balls and leave the EU) would be too great.
  • Len's right ....... 15% is the minimum VAT according to Euro regs.
  • Jeez, what's going on here? I spend all night at work because of the PBR and then get home only to find that Charlton Life has gone PBR crackers, LOL!
    ;o)

    My take on it all, for what it's worth.

    The lower VAT rate will give the economy a £12.5billion boost, give or take a billion or two - i.e. that's money that wont be going into treasury coffers but will be going elsewhere, so it's not to be sniffed at.

    Now, some of that may filter down to final consumers, but probably not as much as is being mooted/hoped for. However, if retailers don't pass on the cut, or at least don't pass it on in full, then that isn't necessarilly "lost" money. If it goes to make the retailer more profitable then that should (hopefully) go towards keeping the wolf from the door, keeping the business afloat, keeping people in jobs, keeping money in their pockets to spend and round we go again. Might all be too late for Woolworths now though!

    Other big winners in all of this, ignoring Joe Public - who may not see much of a direct benefit anyway - and retailers who don't pass on the rate cut, will be organisations who can't get their VAT back in full but will now be paying less in the first place, thereby increasing profits. So guess who - yep, the banks (again!) as well as insurance companies, charities, etc. But that's fine by me if it encourages those organisations to bring forward spending, particularly capital expenditure, in order to benefit from the lower rate because that puts more cash into the economy , and round we go again!

    Bottom line for the ordinary punter in the street is that fags, booze, petrol, council tax, rent, rates, insurance, most online CD's/DVD's, food, stamps and funerals will still cost exactly the same after this cut as before, so not too much to get too excited about.

    One last thing. Our VAT rate was one of the lowest in the EU anyway, so this cut effectively puts it right at the bottom now and, as Len rightly says, it actually isn't permitted to be any lower by our friends in Brussels. Other VAT rates in the EU are up to 25% and the Irish very recently announced that theirs is going up, not down. On top of that we've still got our zero-rates (food, books/magazines, sales from charity shops, childrens clothing) and the Europeans really hate us for it, so basically we've never had it so good you lucky, lucky people!
  • Interesting detail that I saw this morning was that high earners over 140k will lose their allowances entirely and be effectively taxed 50p in the pound for their entire earnings, if I read this right, this is a big hit - and well done I say!
  • socialism just when u get the demon back in the bottle some numpty lets it out again.
  • socialism would be much lower than 140k..

    :)
  • well it would have been Razil but owing to mega inflation the last time the evil that is socialism was about it had to be £140,000.
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