I was going to order £500 worth of pc hardware from Ebuyer/Scan but with the VAT being reduced next Monday is it worth holding on or do you think they will increase the cost of equipment to make up for the difference in VAT?
I was going to order £500 worth of pc hardware from Ebuyer/Scan but with the VAT being reduced next Monday is it worth holding on or do you think they will increase the cost of equipment to make up for the difference in VAT?
It's anybody's guess.
But in the meantime, you could also face more adjustment for interest rate cuts.
Unless you're buying a lot, the VAT adjustment will be pretty nominal. So either way, it's a gamble.
edp33 (25-11-2008)
Ah missed this thread, it pays to search !
http://forums.hexus.net/general-disc...ore-stuff.html
Just wait and see I suppose, they won't be making it more expensive than it is now, although for £500 you'll be saving £11.
That £11 could buy a tasty snack for the whole family or run the PC under load a 10 days every pound saved is worth it so I say wait and see (just hope prices don't rise by more than that £11 and you will be sorted).
If it was a case of "Oh if I wait a week the price of the blah blah component will fall a bit" then I totally agree not a lot of point in waiting but when the tax cut has been announced it would seem foolish not to take advantage of that £11 (providing prices don't rise by more than £11 in this week, but with the pound gaining value against the dollar again hopefully the price rises should be over for a while.)
I wonder what sales of large goods will be like this week? I guess pretty low...
Nah for 80p I guess I can let you off
£10.64p, but who's arguing over pence.
For interest's sake, and for anyone wondering, VAT being reduced by 2.5% doesn't mean prices will go down by 2.5% though (as moogle obviously knows). They go down by 2.13% ..... IF retailers pass the tax rate on.
Or, more precisely, if they don't negate the drop by putting prices up under the cover of this, as they MUST pass the actual tax drop on. They'll be committing a criminal offence of they don't, because the government sets VAT rates, not shops, and shops have NO choice but to implement it (unless of course, they're not VAT registered, and while the vast bulk of shops and other retailers will be, there are a few businesses in select areas that don't have to and haven't.
moogle (25-11-2008)
I assumed you had. You got the calculation, right, though.
I've come across a lot of people that don't seem to quite get the way the rates work .... and unless they're in business or have to work it out, there's no reason why they should.
And for anyone that doesn't, as a rough guide, if VAT is 17.5%, then that's the rate added to the cost of the actual goods to give the price you pay. But if you know the retail, VAT-inclusive price, the VAT in it will be about 15%. That's under the old system.
So, goods are £100. VAT is 17.5% = £17.50. Total price you pay is £117.50.
If you paid £117.50, how much is VAT? About 15%. So £117.50 * 15% = £17.63.
If you want an accurate figure, multiply the retail cost of goods by 17.5/117.5 = 14.89%
From that, it's clear why 15% of retail price gives a good approximation of the VAT when VAT is 17.5%
But as soon as VAT changes to a rate of 15%, the equivalent percentage to work out (approximately) how much VAT you paid is 13%.
Or more accurately, 15/115 = 13.04%
So, under the new system, if you bought a £100 item, the VAT you paid was 13% = £13, roughly. It would have been 15% of selling price, which was £15. You saved roughly £2 or 2%.
The government cuts the rate of tax added by 2.5% to 15%, meaning that if it's fully passed on, the price will reduce by 2.13%, and I use 2% as a quick and easy mental calculation.
So people, if you see something today at £x, and next Monday, it hasn't gone down by 2.13%, you aren't getting the full tax cut passed on and the retailer has taken the opportunity to increase margins.
moogle (25-11-2008)
No joking, I have noted down a fair few key product prices, from a few potential suppliers.
It's not so much that I care much about what they do with the prices because I'll save money, because the amounts are barely significant. It's because I'm curious about their business philosophy, and whether they'll use this as a chance to exploit customers or not. It'll tell me something useful about people I do business with .... or might do it with.
If you're VAT registered then the change has no "real" impact so just shop as normal if you qualify for a VAT rebate .
IF prices go down to reflect the reduced tax, yes.
But if, as has been suggested, some shops keep their retail prices the same, then they've increased basic price and margin by the amount of the VAT reduction. And, as VAT-registered business, that affects me.
If that extra couple of quid per hundred is VAT, I can reclaim it. If it's extra profit margin, I can't and my input prices just rose.
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