Reduction of UK's VAT

[arigram]

Will the reduction of the VAT in UK from 17.5% to 15% have any positive effect on analog materials and will it affect non UK customers?

 

[PhotoJim]

It's not charged on exports, so it shouldn't have any direct effect on you unless it reduces the cost of inputs. Most GST/VAT-type taxes have input tax credits so I assume the effect will be neutral for exported product from the UK.

 

[RH Designs]

Will the reduction of the VAT in UK from 17.5% to 15% have any positive effect on analog materials and will it affect non UK customers?

It will affect customers in the EU as they will be charged VAT at the new UK rate (from Monday), a reduction of a little under 2.5%. Having just spent hours reworking our website I've now got to do it all again with the new prices ... :rolleyes:. As an example, a StopClock Pro will reduce from 195.00 to 190.85 pounds.

Customers outside the EU won't be affected, unless of course the pound continues to nosedive!

 

[Ian Leake]

I think that as a resident of an EU member state that you pay UK VAT if you buy a product from the UK (unless you have a business which is of course VAT exempt). So in theory it should benefit you. However many companies select their price point and then deduct VAT to calculate their base price. Someone who charges £9.95 is unlikely to reduce the price to £9.74 because of all the complexity this involves, so most consumer retail businesses will keep their prices unchanged and simply pocket the saving.

Edit: I crossed posts with Richard. Well done for proving that at least some retailers put their customers first

 

[Andy K]

For UK consumers it is a bit of a con. The savings are so small that I certainly won't change my buying habits.

 

[Anon Ymous]

Photojim, when goods are exported from an EU member to another (like UK -> Greece) and you buy from a retailer you pay VAT at the place you buy from (UK) and that's all. No import taxes will be applied. Of course, prices for non EU customers will be unaffected.

So, Ari, the price reduction will be the same as for the UK residents. That is aprox 2%.

 

[Ian Grant]

The VAT saving isn't to be sneezed at. It will also help thousands of small businesses like some of our UK sponsors who sell to the public. Companies like Silverprint not only have to charge the VAT but also have to pay it back to the VAT office.

For UK & EU photographers who aren't VAT registered (running a commercial business) it is a very significant cut in the tax, reducing VAT from 17.5% to 15% is an 14% reduction in the amount taken as Tax.

The savings for a customer around 2.2% Your £100 of goods was £117.50 with VAT, it's now £115

Ian

 

[arigram]

I am personally not affected as I am registered as a commercial photographer and so I skip the taxes (only good thing that came out of it), but I was curious as came upon the news. As Ian says it is probably a good thing for non commercial photographers. Thank you for the information and clarifications.

 

[PhotoJim]

I stand corrected.

I wouldn't call it an insignificant tax reduction by the way. 2.5 percentage points on 17.5 works out to a 2.5/17.5 or 14.2% reduction in the sales tax you're paying on any VAT-charged transaction.

The tax rates are lower here in Canada but a similar reduction would be 25% of the sales tax paid here in Saskatchewan, and 50% in Alberta, where the combined provincial and federal taxes are 10% and 5%, respectively.

It all helps. And it's surprising how little of a tax reduction consumers need to consume more goods and services.

 

[Ian Grant]

It's worth remembering that before VAT in the UK there was Purchase Tax and that was punitive on Luxury goods. Cameras, lenses enlargers etc and LP's (33rpm gramophone discs), all were taxed at the highest rate 37.5%. (The only things I bought ) VAT was and still is a fairer system.

Ian

 

[milkplus-mesto]

The main trouble with this (very temporary) cut is just what is going to pay for it. A new highest rate of income tax, an increase in national insurance among other things. How can more borrowing be the solution?

 

[Ian Grant]

It's an odd equation, but think back to when income tax was 98% in the top bracket and the very wealthy moved abroad, I know a few who had to go they didn't want to. When the tax rate was cut they all came back, net result - a tax cut but far higher tax income.

This is similar in a way - higher VAT means far less sales, Lower Vat in a recession might actually help stimulate sales by more than the Vat cut, net result Governments VAT revenue shrinks but by less than if Vat was at the old rate.

Ian

 

[tim_walls]

It's an odd equation, but think back to when income tax was 98% in the top bracket and the very wealthy moved abroad, I know a few who had to go they didn't want to. When the tax rate was cut they all came back, net result - a tax cut but far higher tax income.

This is similar in a way - higher VAT means far less sales, Lower Vat in a recession might actually help stimulate sales by more than the Vat cut, net result Governments VAT revenue shrinks but by less than if Vat was at the old rate.

Unless the public realise that the VAT cut is being paid for by increased fuel duties, a hike in National Insurance (that'd be Income Tax with a prettier name, for any overseas readers,) and increased alcohol and tobacco duties.

And we have to hope the public don't realise that the VAT cut has no effect on the cost of public transport (public transport not being VATable,) has no effect on their gas or electricity bills (charged at a different VAT rate not being reduced,) has no effect on their food bills (not VATable,) or the cost of clothing or buying books for their kids (also not VATable.)


Provided the public don't realise any of that, it should provide just the fiscal stimulus the government is hoping for!


I know I for one will be saying "sod the fact my gas bill has just been increased by 25% - I can get 2.5% off a flat screen telly; rack the credit card up, we're going in!" :rolleyes:

 

[Steve Smith]

For UK consumers it is a bit of a con. The savings are so small that I certainly won't change my buying habits.

But that's another roll of film you can afford every time you spend a mere £100.



Steve.

 

[RH Designs]

I think it might prove rather difficult for some retailers to implement a tax change like this across the board in just a week. And of course nobody's going to buy anything this week when it will be cheaper on Monday. So I may as well go out with the cameras till then .

 

[Simon R Galley]

Dear All,

Well it is something for our customers.....but will need to be part of a much larger package of measures, as always they sneak in increases elsewhere in National Insurance for instance that negates any benefit we would really have, regardless and obviously HARMAN technology will reduce VAT as of 9.00am GMT this monday.

Regards Simon : ILFORD Photo / HARMAN technology Limited :

 

[Matt5791]

Dear All,

Well it is something for our customers.....but will need to be part of a much larger package of measures, as always they sneak in increases elsewhere in National Insurance for instance that negates any benefit we would really have, regardless and obviously HARMAN technology will reduce VAT as of 9.00am GMT this monday.

Regards Simon : ILFORD Photo / HARMAN technology Limited :

Hi Simon

Are you all breathing a sigh of relief up in Cheshire as the value of Sterling has fallen against the $ and Euro?

Matt

 

[tim_walls]

Hi Simon

Are you all breathing a sigh of relief up in Cheshire as the value of Sterling has fallen against the $ and Euro?

Isn't silver normally traded in US$/troy oz? The spot price of silver has actually decreased over the last few months (Gold is apparently still the preferred choice for the panicked investor fleeing to safety,) but I wonder how much of that is a reflection on the increased strength of the dollar; i.e. in real terms for Ilford, the fall in value of the pound may help exports, but isn't necessarily going to help input costs (i.e. not least silver, but I'm sure many others as well - given the total collapse of our manufacturing and industrial sector over the years I can't believe half the raw materials don't need to be imported...)

I would speculate, anyway . Be curious to know some more about the real economics... In any event, I'm sure times are as tough in Cheshire as they are everywhere else .

 

[Aurum]

For me working for a brand name that supplies to the high street, POV, well...

We haven't seen our finance & IT bods much today, and they look a bit grumpy, as they've been updating all the systems.

Will it effect us?
Well we buy in goods sans VAT as we are a business, and we flog them to retailers in the same manner. The retailers are the ones who collect the VAT from Joe Public. All we can do is set a Recommended Retail Price. The retailer can charge what he likes, provided the public will stand it.

Will the retailers drop prices? Well I'm unconvinced. If they have a product that is selling well without discounting, and is VAT liable, part of me thinks the retail price will be the same, and the retailer will pocket the difference.

Or am I just a F***ing cynic

 

[Simon R Galley]

Dear Aurem,

No your not a cynic..........I am wondering if the £1.00 only stores will reduce all prices to 97.5p ?
but as you say, we will reduce the VAT but we have no way to ensure that saving is passed on to the end user by any retailer all we can do is issue an RRP or SRP.

Regards

Simon. ILFORD Photo / HARMAN technology Limited

 

[Martin Reed]

Dear Aurem,

No your not a cynic..........I am wondering if the £1.00 only stores will reduce all prices to 97.5p ?
but as you say, we will reduce the VAT but we have no way to ensure that saving is passed on to the end user by any retailer all we can do is issue an RRP or SRP.

Regards

Simon. ILFORD Photo / HARMAN technology Limited

Well now the day is here, we at Silverprint are selling 8x10" Value Pack Multigrade (100+20) at 54 New Pence cheaper.... it's a headache though for all the companies that go in for strategic pricing (xx.99).

 

[Steve Smith]

it's a headache though for all the companies that go in for strategic pricing (xx.99).

Do retailers still think that this 'strategic pricing' works?

I would much rather pay £10.00 than £9.99 and have to wait for my 1p change.

I'm sure retailers would rather deal in whole numbers too instead of having to give change for every transaction.



Steve