Tax Cuts!
 

All 3 parties appear to be falling over each other to cut taxes with Cameron and Brown apparently announcing them tomorrow morning.

I'm sure there will be a wide range of tax cuts, the purpose of which is to stimulate the economy. What I want tomorrow is a massive tax cut on energy saving products. Not only is it good for the environment, but buying energy saving products is a fantastic way to reduce fuel bills which can really help people out financially.

What do you make of the tax cuts once they're out? Any bets on if I'll get my wish? :D

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see what yer getting at, but no point cutting tax on energy products when people aint got the dosh to buy em.

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I need a hair cut.

I hope tomorrow's announcements will help me decide how much to have off.

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Yes very salient point, my suggestion would only work in conjunction with other tax cuts. The energy one would not provide instant relief, which we desperately need right now.

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...or are too afraid to use them, because they're frightened the bill may be so high they'll struggle to pay it.

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I heard it mentioned of a 5% cut in the VAt rate. Only one problem we aren't allowed to do it :(

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I think that they should start with cutting petrol and diesel tax first . They have got to get the transport industry back on its feet first to transport the goods around the country !

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Being selfish like, just hope he will do a U-turn on the 10% disaster ...affecting me plenty at the moment, and will give me a little more to spend come Christmas ... :help:

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I would like to see reductions in Income Tax to benefit the lower paid. An increase in the personal allowance (amount earned before income is taxed) would take many people out of the taxation bracket, and rightly so. Anyone earning, say, £10,000 a year is on a low income yet he/she will pay tax on any earnings over £6,035. He/she will only be eligible for Working Tax credit if working 30 hours a week or more.

The personal allowance should be increased to, at least, £10,000. The loss of revenue could be paid for by increasing the higher rate of tax to 50% for those earning over, say, £100,000 a year.

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Why not get rid of the Tax loopholes that the very rich (all those bankers for example) exploit to pay little or no tax. Then introduce a 20% tax for everyone, regardless what you earn. This will encourage people to work harder and better themselves.

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sounds ok, only problem i can forsee is MPs probably use those loopholes themselves in many instances.:D

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Rather than messing around with tax cuts this and any government should be looking at how our taxes are spent or should that be wasted.

A huge chunk is spent on departments collecting them, not forgetting the hundreds and hundreds of Quangos. The reader can name the rest.

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We only pay 5% on fuel bills and 5% is the minimum allowed by the EU.
It may well be possible to extend it to other things, and Ken Clarke was suggesting this very thing on tv a few days ago.

At the moment there is a petition to #10 which is asking for it to be applied to real fruit juices, and it has a large number of signatures.

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Ten days after I posted that - the good news has arrived
Brown and Darling slash VAT in £18bn tax gamble - UK Politics, UK - The Independent

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I wonder if this VAT cut will actually cost shops money?

They will have to change the VAT rate that has sat still for 34 years.
I wonder if it will be easy for all the online sites to change their VAT levels. I know it should be easy but you never know.

This sounds good for now but it has been suggested VAT could be over 20% in a few years to pay for it all.

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(quote andrewb) What I want tomorrow is a massive tax cut on energy saving products. Not only is it good for the environment, but buying energy saving products is a fantastic way to reduce fuel bills which can really help people out financially.

We already have reduced vat on energy saving products, energy efficient boilers for example attract 8% vat, the company buying the boiler pay 8%, but it is still 17.5% to the end user, so it does reduce the invoice to the customer, but not as much as it could if the 8% was for the total job, and not just for the purchase of the boiler, if joe public bought a boiler, I am fairly sure it would be at 17.5%, because the distributors know you cant claim the vat back. Fuel duty at 57p per litre would be the wisest place to cut tax at this present time.

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Thank-you for that, very interesting, I hadn't realised that was the case.

As for the VAT cuts which are going to be announced tomorrow, I do hope they are properly funded tax cuts rather than being backed up by even more borrowing. We're already seeing our pound plummet in value, if it goes too far the rise in prices of imports will out weight the cut in VAT.

We're in this mess because the government allowed the private sector to over borrow, and now it almost seems like we're trying to counter that by over borrowing in the public sector. Time to live within our means.

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The only thing with these tax cuts is the massive borrowing to pay for it, we are already in debt to the tune of around £60 billion (the biggest debt in our history) and we will have to pay it back. Its the idea that by putting more money in the pockets of the the less fortunate, they will spend more, but will they. A lot of the people in this category are pensioners, who are far more thrifty than most and are likely to put the money away in order to pay for things when the inevitable increases appear

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Stop wasting our money Mr Brown then you wouldn’t have to borrow - to pay back later.

We don’t need all the white elephants and we certainly don’t want them.

Push the energy companies to put the prices back to what they were in June.

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I have just seen on the news that vat is to be cut to 15%, that is good for things vat was paid at 17.5% for, but cold food, kids clothes etc are non vat, so this will only benefit business, if they pass it on that is good, but I suspect you may get 2.5% price hikes to cover for the lost revenue.

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Ah now that's more like it...same old view..should we try the old Tory "Trickle Down" policy by giving cuts to businesses hoping the extra money will somehow seep down to the less well off?....if tax cuts are given to the already well off they are likely to spend it on a nice foriegn holiday or private school fees etc...nice! ;)

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So my understanding that vat revenue didn't matter (as vat paid was offset by vat income, with the difference going to mr taxman if there was any left) is totally off the mark?? How can a supplier who charges vat increase prices when what we pay is cost plus vat - whatever amount vat is??
Please excuse me if I am wrong but if there is a cut in vat then what we pay for goods SHOULD drop too. If they don't then surely the shop/company/individual who sells the goods should be held to account for blatantly increasing their prices and therefore their profit??

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My income doesn’t attract Income Tax and my spending rarely includes VAT so Brown and Darling’s generosity is going to have very little affect on me and millions of other pensioners and not forgetting those on benefits.

These measures are only scratching around the real problem and that is the uneven distribution of the country’s wealth that all of us have created.

A minimum wage that is taxed and then given tax credits is plain barmy.

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Spot on Phil, the energy companies for one have been doing it for years, the supply to them drops in price, but you dont see the benefit for months. So it follows that businesses get a drop in vat, if they drop the price at the checkout, you probably wouldnt notice anyway, and they have already suffered losses, so they will make up the losses, plus a bit, before they pass the vat reduction on, they will also sell on old stock at the old vat rate. But, just so you know, here is how vat works.. I buy something for the business at £100, the vat I pay is £17.50, even if I didnt put profit on (which at retail is 35%) then to sell the £117.50 on to you is plus vat, so you pay ££117.50 plus vat, equalling £138.06, the retailer pays £38.06 to the vat man and claims back £17.50, so you paid £38.06 to vat and the business claimed back £17.50, the vat man made £20.56 out of you!

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That doesn't add up to me :confused:
Surely, you'll be claiming the vat back as well as the retailer?? Which means vat man made just £3.06 from the end product (ie me) with £17.50 being reclaimed by both Yourself and the Retailer.

Under the new rate your example equates to £100 to £115, then the £115 to £132.25. Which means I, as the end user, have saved £5.19 with the vat cut. As I don't feel like I'm paying the tax anyway, because it is part and parcel of everyday purchasing life, then it is a very REAL reduction in what I pay for goods and services.
Therefore any reduction in vat will be felt by all who buy things governed by that particular tax.
Unless, like I said earlier, suppliers and retailers blatantly increase profits by keeping goods and services at the same end user price.

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I AM a retailer Phil, I have a showroom and an office too, we have to pass on vat to the customer, but we will take the reduction into account (which means re-pricing everything we sell) but I can gaurantee that many will not.

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In a nutshell Phil, this is how it works: manufacturer to distributor + vat, distributor to merchant + even more vat, merchant to retailer + a ridiculous amount of vat, result = end user pays everybodies vat, and everybody else can claim some of it back, hence if you go direct to the merchant or online, you pay an inflated price which is somewhere in between what the retailer would buy for and what the merchant can actually sell for!

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Well there has a lot been made of a two and a half percent cut in VAT, but what is it really, some analyst has already said it could be a whole £10 off the Christmas present bill, or 5p of a pint, but would it be passed on, 15p of a £6 bottle of wine, can't really see his encouraging people to go out and do a Viv Nicholson and spend, spend, spend and considering that at the end of it all the country will be in hock to the tune of £120 billion or even more the future is less than bright:(

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Thank God we have Gordon Brown in control of the economy of the nation and not those fly by night chancers, Eton smackhead,bottom burning, Tories in charge!

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Just one question .......... Are the pound shops going to be 98p shops now?

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Well I reckon that 17.5% of £1 is 17/p 5 shillings and sixpence..so 15% of £1 should be 15/p ..that means the price should go down by 2 shillings and 6 pence for every pound.

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Don't know about Special Brew Mancie, but for heavens sake keep taking the tablets:eek::D Mancie for PM:rolleyes:

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A document signed by treasury minister Stephen Timms says VAT will rise to 18.5% in 2011.

The government are now saying that they rejected the idea, despite it being in the final draft. :rolleyes:

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No, what it means is that we will still pay the same for many things but shops will make more profit.

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[quote=Neil;654049]I wonder if this VAT cut will actually cost shops money?

They will have to change the VAT rate that has sat still for 34 years.
I wonder if it will be easy for all the online sites to change their VAT levels. I know it should be easy but you never know.
quote]

You are incorrect in saying that the VAT rate has sat still for 34 years - there have been several changes in the rate since it was first introduced in 1973. The last major change to standard rate VAT was in 1991, when it was increased from 15% to 17.5% in an attempt to reform the ill thought out 'Poll Tax' when millions of people were suddenly expected to pay exorbitant bills, compared to the old Rateable Value system.

(I copied this from a report produced by an Australian University)

VAT was originally introduced in the UK in 1973 at a standard rate of 10%.
In 1974, this was cut to 8%, but VAT was levied at an additional "luxury
rate" on a range of items at a rate of 25% from 1975. The wide disparity
between the two rates and the range of anomalies in the relative taxation of
items falling in different categories led to the 25% rate being reduced to
12.5% in 1976. However, the administration of the two rates remained
difficult and further revenue was required to permit reductions in the rates of
income tax. In 1979, therefore, the two positive rates of VAT were amalgamated at 15%. Much later, following the poll tax disaster, a substantial slice of local government taxation was also replaced by a further increase in the rate of VAT to 17.5% in 1991.

The VAT base has also been extended since 1973. An early change was that
the original concession for food and drink did not seem to be quite so
appropriate for confectionery, ice cream, soft drinks and potato crisps, and
they were duly subject to VAT from 1974. Other anomalies between goods
and services subject to VAT and those not taxed continued to cause problems
and some further extensions have occurred since 1973. For example,
imported services became taxable from 1978 and a further range of items
from 1989.

One such issue that was quite noticeable was that originally meals that were
eaten on the suppliers’ premises were subject to VAT but "take-away" meals
were not, including the British staple of fish and chips. The result was a
significant shift in restaurant meals to "take-away" service and VAT was duly
extended in 1984 to hot food consumed off the premises. After a range of
entertaining but unsuccessful attempts to avoid the new provisions, such as
free hot fish and chips to go with the VAT-free (cold) salt and vinegar, this
change was generally accepted by taxpayers.

Re: Tax Cuts!
 

If VAT is being levied at 17.50% in pound shops the nett price is 85p + VAT of 15p, which gives a selling price of £1.00. From Monday, when VAT is 15% - if they pass the VAT reduction on they should be charging a nett price of 85p + VAT of of 13p, which gives a selling price of 98p. But I suspect that they will increase there nett price to 87p, which with VAT of 13p would give a selling price of £1.00.

I know 2p is not a great increase in their profit margin.

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I was always of the understanding that VAT was set by the member countries and the Gross takings paid to the EEC coffers.
Rebates were to be applied for from the central EEC fund depending on GDP and requirements of member countries.
The infrastructure of the UK was considered to be sound and most of the money was, and still is being claimed to build roads etc., for the developing countries, Spain being one of them. The roads in Spain are far superior to the roads in the UK.
Malta was given money from the fund to build roads...hey presto..that vanished.
I am anti european and maybe, only maybe the current crisis will bring with it a few home truth's about our ecomony and the way that that the EEC is funded and what will be the outcome.?

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If you are anti European how came you are living in Spain - which the last time I visited was a 'foreign' country. Do you neighbours and the other residents of La Villajoysa know that you are so Zenophobic?

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I live amongst my Spanish neighbours quite comfortably and enjoy their company. We discuss quite freely the for's and against the EEC whilst having a smoke, which we both enjoy.
I like Spain for what it is, I like the people, I like the the sun, I like the price of the tobacco and the price of the alcohol.
The resident's of La Villajoyosa don't give a toss for the EEC and neither do I. ;)

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gotta agree there, all my mates when i lived there were interested in how, Malaga were doing, not remotely interested in the EEC, even though i have a different view to membership than roy.

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It is a 2.4% profit increase for the shop thanks to the governments attempt to reduce the purchasers cost.

I agree I was wrong with the 34 year bit. I must have only half read the info I got it from.

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What's the point of it anyway? According to the Governor of the Bank of England the effects of the reduction won't be felt until the second half of next year. By that time, according to Alastair Darling, we'll be climbing out of the recession anyway...of course, that's if you believe Alastair Darling. ;)

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When he finally leaves politics they say he is line for the job as editor of Billy's Weekly Liar:D Tony Blair is already executive editor:rolleyes: and John Prescott the errand boy;)

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if the shops act like the banks are doing we wont benefit from a cut in v.a.t anyway

the govenment gives these breaks to the banks and retailers but wether they pass the savings on to us is another thing all together

cant see this cut in v.a.t altering my life anytime soon or indeed actualy be noticed ever

fuel and british gas will take any penny we save and more when their next bout of greed is due anyway

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The Problem raised by this VAT rise is that a lot of small to medium businesses are being saddled with huge cost in making these reductions, at a time they can ill afford it, and aware of the fact that in April 2010 they will have to go through the whole processes again when the rate is returned to its present level of seventeen and a half percent

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i think a £200 table will still cost you £200 regardles of the new vat rate and instead of huge %20 off signs we will now see %2 vat off signs in the shops but regardless of what teh signs say the price we see items for sale at will be a price they want regardless of the vat levels

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I still can't see small shops changing prices at all, just making more money.

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I think you are mistaken about the costs involved to small to medium businesses being sadled with huge costs. Most businesses have computerised accounting systems and it is very easy to change the VAT rate, it is just means going into the master data -which shows the various parameters - and changing the percentage figure. I have been involved, at companies I have worked at, in previous VAT changes. If they are not computerised it just means multiplying the nett price by 15% instead of 17.5% to calculate the gross selling price.

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Apparently like most of your ilk you stick your head in the sand and don't watch news programs, that is not what a lot of small to medium businesses are say, but of course I'll bow to your superior knowledge and intellect. One man interviewed this morning was having to reprice 6000 items and was having to update his stationary by Monday to comply with government demands, these are not imaginary people but real people living in a real world

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What about all the stationary that they have had printed with "VAT @17.5%" on ?

Also re teh computerised systems, quite a few small businesses do not understand or may not even have access to teh global parameters in order to change them and will have to pay someone to do it for them. God helps you if you had some bespoke software written where its hard coded inside the app and not readily accessible

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Exactly the point I was trying to make entwisi, but as I've always said there's non so blind as them that can't see, or don't want to;)

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They were a little short sited as VAT is a variable that could be changed at any time.

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As far as prices are concerned, someone has to be paid to go round and change them all, this works out more expensive than the savings, without mentioning the raise in employers national insurance, so you are unlikely to see price reductions on everyday small to medium items, only on things like cars etc. You also have stock that was paid for at the old rate, so selling it on at the new rate will cost the middle men three pound per hundred approximately.

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It bothers me that the worst off are going to benefit less. VAT is generally charged on luxury goods, not essentials, what difference does this pre budget report make to a family on a low income struggling to pay for the weekly food bill? When in a few years time they will be paying through the nose with increased taxes to pay for the massive borrowing binge the government is on at the moment.:mad:

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You are right with prices having to be changed on individual items such as newsagents, toy shops and other retail outfits....that does cost money.
On the second part regarding VAT. The VAT paid on goods by retailers or manufacturers is claimed back from the government. The new rate has to be paid to the government.
If an item was purchased with 17.5%. and the new rate is 15% - 15% is what you would have to pay on irrespective of what VAT was claimed.

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Of course now that we all owe £10-000 pounds the good news is that we can pay ourselves back in a couple of years time as long as we pay the interest.:hehetable Beam me up.

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But the retailer loses 3 quid in every hundred for however long the stock is carried, compared to what they buy in now. In terms of work carried out last week, which in our case would be around £5000, if we changed the invoice (from the quoted figure), then overall we lose out, the vat on labour rather than products is the issue. some of our products are bought in at the full rate, and sold on at 8%, and we cant claim that back for three months as it is, and so lose interest too.

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Apparently the VAT cuts will begin in the supermarkets as of friday......:D:D

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how come i had to pay an extra 50p to have my subway sandwich toasted because of vat?

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cold food doesnt attract vat I dont think, but when you toast it, it is hot food. Another vat item that gets up my nose is tea and coffee, we buy the stuff in for staff, and pay vat on it, but cant just claim it back, we have to charge it with vat to ourselves. So if we buy sugar, we claim the vat back, but have to add vat to the cost first and pay the difference, otherwise we would have to pay the vat on what you would charge to sell the tea/coffee on. Marshalls mono used to have free brews for the staff, then they got slapped with a £10,000 vat bill because they claimed the vat on the stuff, but didnt pay it on the making up.

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:eek: daylight robbery!!!

Do you pay it? :rolleyes:

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yeah lol...i wanted it toasted if i werent having salad an sauce i woulda done it at home lol

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well if people pay it......:rolleyes:

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i sat here all day waiting for a package (that bloomin well came 10 mins after i went out!!!!) thinking about having a bmt from subway (ask emzy adn mrskitty lol) and i was bloomin well gunna have that sandwich!!!!!

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You should'nt lose out at all....The invoice that you prepare is a service you provide and the date you raise the invoice.
You will not have to pay VAT at the old rate.
A £10,000 investment at the current 5% if your lucky, earns £500 per annum.
Let's not forget that you hold funds due to the Government for the same amount of time.

If an invoice was issued today for work carried out then the Vat applicable would be at 17.5%.
If an invoice was issued for job done on 1st December the Vat applicable would be at 15%.
If you have quoted for a job and the invoice date is of today then you would be quite within your right to charge at 17.5%.
Dont forget this would have to be declared and paid as output to the revenue.

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So is it only VATable when you give it to them hot? You could give it to em cold and let them add the hot water themselves

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and subway could let ya toast yer own butts.:D

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Do you pay VAT on the pretend food you get in petrol stations that you microwave yourself? Can you buy it first then warm it?

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What about when I buy a minging bacon sandwich from the vending machine at work. I pay first to get it then microwave it afterwards.

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Are you sure that you are paying VAT on tea, coffee and sugar. In fact I have just checked on the Makro website and they have both Tea and Coffee pn promotion and clearly state they are zero rated for VAT.
http://www.makro.co.uk/metro_mail/mc...ailer_16pp.pdf

If you bought your tea, coffee and sugar from a wholesaler the items should be marked as zero rated.

I think the reason that Marshalls were slapped with a big bill for providing free brews to staff is that the brews were not being declared as a 'benefit in kind' for the employees. As you are no doubt aware there is an annual limit to the what an employer can give an employee as a 'benefit in kind' before the employee becomes liable for PAYE on the benefit. However if an employer fails to deduct PAYE correctly they then become liable to pay for the PAYE owed.

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Well I have news for you I don't stick my head in the sand and I do watch news programmes. How many small to medium businessmen have you spoken too about the 'problem'. I have been speaking to a lady who owns 2 small businesses in Accrington this evening, who stocks hundreds of items and she does not forsee there being any problem at all.

How do you think businesses coped in the past when VAT rates were altered?

I take it that you are experienced in Accounts and therefore well able to comment on the matter.

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what i cannot get me head around, is how will small non computerised places alter all their prices? can't see it being so easy.:confused: then have to change em back in a few months when VAT reverts to 17.5%.

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Well they just divide their current selling price by 1.175, which gives the nett selling price and then multiply by 1.15 to give the new gross selling price (with the new rate of VAT). The VAT will be 15% until 31/12/2009 so most of the stock would be presumably have been sold by then. Also unless a business has annual sales of over £67,000 it does not have to be register for VAT.

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That is ok if they have no stock when it changes back. As I am sure they will have stock on the shelves they will have to change all the prices again.

I still say a lot of small shops won't change the price and will just in effect increase the net price instead.

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thats the thing i thought.:confused:,as n aside to the tax cuts etc, britain is about to borrow 150 or so million, usa apparently trillions, according to reports, all countries in the mire will also have snouts in the trough also, i am assuming this money will come from the IMF, as aint aware of a magical bank in the sky! it prompts these thoughts to me,Where does "All" this money being borrowed originate from? n why is the world in this crap if all this money is available?:confused:

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They would just ask who provided the hot water, and charge it anyway. :rolleyes:

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I dont do the accounts, but as far as I am aware, it is because they are hot brews, and as you say, a benefit in kind, so you pay vat on the stuff that wasnt charged vat originally.

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I agree with that roy, and I dont actually do the accounts, but am assured that this reduction is costing us in one way or another, I assumed it was on work which carried over the reduction date, whatever the reason, the accounts people aint chuffed about it, some of it is because to do it by the book, they will ultimately be changing the prices then altering the national insurance contributions, then it will all change again next year, so in more ways than 1, it is costing small business rather than helping them.

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It is probably quite true that small shops won't cahnge their price downwards and increase the nett price. However on 1 January 2010, when VAT is increased they would have to prove to a VAT inspector that they had decreased their nett price ptherwise they will have to increase the gross price then.

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There is a thought isnt it, haha, claytonender, are you trying to pee my accounts people off more than they are already? ;)

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I probably know more people in business than you've had hot dinners (plus VAT) I think there is to much static on Radio Jones at the moment, switch off and please try later. I can't see the point in a temporary reduction of two and a half percent when most high street shops are already cutting up to 70% on goods that are VAT registered all ready. If there was VAT on food I could just about understand it, but at the moment I can't see the point, and to borrow Billions of pounds to do it is crazy. This exercise is more about saving Gordon and Alistairs skin rather than helping the nation through a crisis which in part was manufactured in Downing Street, as economists with no political axe to grind have said, we are one of the least prepared countries in the World to enter into this recession

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I saw a tv prog earlier this week which explained that governments raise money on international bond markets.

The programme said that USA was in hock to China for a fantastic amount, and US living standards would plummet if China demanded it back.

It didn't go into detail about our debt, but I imagine the Saudies have lent to us on a big scale.

These massive debts must affect foreign policy don't you think?

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Margaret, I too watched the assent of money, it was very informative.

Subway now have two tier pricing. If you have a cold sandwich, there is no VAT. If you have that sandwich toasted, they have to charge VAT. Therefore the price of a cold sub of the day retains the £1.99 price, however if you choose to heat it, it costs £2.19.

Now it may be me, but 20p is neither 17.5% nor is it 15%. Anyone any clues?

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Electricity costs also?

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It will likely be the cost of the contents of the sandwich, heated, but the bread is still served cold (on paper anyway), so the charge is for the hot contents only.

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I did read about this somewhere, and it's because the VAT man has clamped down on Subway. Although the rise is because of the vat the reason it doesn't cost £1.99 plus vat is because they knew customers wouldn't stand the price hike of 35p for warming it up, but on the other hand if they served a £1.99 sub heated then they would lose 30p to the vatman so they ended up making a loss on them. They came up with the 20p so it became close to break-even as they could make it whilst not putting to many customers off.

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I see, so they're giving a cut of the £1.99 to the tax man rather than keeping it in the business, but a smaller cut as it's offset by the additional 20p? Hehe.. The notice within Subway is quite amusing. ;)

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So you are being over charged for a cold one. Ask for a hot one but cold and pay £1.90 for it :)

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Is it true Neil, that you are so tight, you look under your pillow each morning to see if you lost any sleep? :p

Re: Tax Cuts!
 

Its not the money - it is the principal of it.

Is it legal to reduce the net on the same item if you ask for it heating just to reduce the tax on it?

Re: Tax Cuts!
 

I wouldnt have thought so, but the vat man wont hang about if they are trying to dodge vat!

Re: Tax Cuts!
 

That's the problem.. they're just going to create it by printing the money. :mad:

It devalues the currency making every pound in our pockets worth less.

Re: Tax Cuts!
 

Just a small point - but if all of Europe and America and Asia owe all this money.
Who the hell do we owe it to.
Can't possibly be the all people are equal nations could it???:hidewall::hidewall:

Re: Tax Cuts!
 

Now where did I here that before, the pound in your pocket, let me see, oh yes, its just What good old Herold Wilson said when the Labour Government of the sixties had just devalue the pound:D