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?
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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.
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).
Oh I'm not bashing the saving :)Quote:
Originally Posted by Webby
Just some people might think it's not worth waiting a week for saving £11~
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...
It sure will be, me I'm just buying my things this week though as it's not worth waiting a week to save 80p isn't it :PQuote:
Originally Posted by Webby
Nah for 80p I guess I can let you off :p
£10.64p, but who's arguing over pence. :DQuote:
Originally Posted by moogle
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.
I just did a quick mind calculation 500 - 489Quote:
Originally Posted by Saracen
Good to be correct though :P
I assumed you had. You got the calculation, right, though.Quote:
Originally Posted by moogle
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.
*Notes down key product prices* :mrgreen:Quote:
Originally Posted by Saracen
Joking aside thanks for yet another informative post ;)
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.Quote:
Originally Posted by Bugbait
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.
Don't forget to note the £ vs $ prices too just to make sure they can't pin it down to "the exchange rate", unless they don't buy their stock in $ (I'm thinking about PC parts here as you can guess :D)Quote:
Originally Posted by Saracen
I agree though it'll be interesting to see who does try to gain more profit out of this though.
Correct, but prices online (Scan is a good example) can fluctuate more then 2.5% each week. Even without a VAT rebate the decrease of 2.5% wouldn't influence my regular purchases.Quote:
Originally Posted by Saracen
Like you, I'm interested to see what businesses do. It would seem "skimming" 2.5% would hardly be worth it if they're truly a VAT registered company but in an industry with traditionally small reseller margins it wouldn't come as a surprise either.
Oh I'll have to just look at trends and comparisons. There'll be no categoric answer.Quote:
Originally Posted by Bugbait
But I'm not so sure about that 2.5% "skimming" not being worth it. It is (albeit 2.13%) a small percentage of the sale price, but many online firms have pretty small margins because it's so competitive, and they rely on a small profit on a lot of transactions. If it's a £100 CPU, then the chip itself sells for abut £85. But what did they buy it for?
A couple of quid as a percentage of £100 isn't large enough to influence my buying decisions, but if you were making £2 profit and suddenly find the opportunity to make £4 profit, you've doubled your profit. That is significant.
The balance to that, of course, is that the areas with really tight margins like that are those where competition is really tight and, fortunately, that's exactly the market where competitive pressures will prevent firms from milking this, like online computer components. If they do, Joe Public will look at the competitors, see things are a couple of quid cheaper elsewhere and, by and large, switch suppliers. They really could only milk it if everyone else did too, and the chances of that? ;)
That'll keep 'em honest. :D
yep same here lolQuote:
Originally Posted by Bugbait
hum i wonder what happens to the invoices ive sent but not been paid ?
It depends.Quote:
Originally Posted by s3ds
If the invoice was sent in relation to goods or services supplied before the start date (1st Dec) then the 17.5% rate applies regardless of when you sent the invoice. So if you invoice mid-Dec for something you supplied in October, then you charge at 17.5% (and account for that to HMRC) as you would have before the change.
In the normal run of things, and assuming you aren't using the cash scheme not the accrual scheme, and aren't using a flat-rate scheme, then the general position is that the date you supply the goods or services is the tax date, so if you supply after 1st Dec, you use the new rate.
The exception to that is if you were paid before you invoiced. For example, you issued a pro-forma (not a VAT invoice) for a PC build in mid-Nov. The customer paid on the pro-forma, during November. You then buy the bits, build the PC and supply it after the start date of the change, i.e. in Dec. In that case, since the invoice was after the start date, it might seem that the correct rate would be 15%, but since you were paid at the old rate, the correct rate is the 17.5%.
Similarly, if you invice after 1st Dec but for goods/services supplied more than 14 days before the start date, you invoice at the old rate, even though you're doing so after the start date. So in that case, it's the date of supply that matters, even though you're invoicing after the new rate comes in.
Or, If the invoices you raised before 1st December were for goods or services supplied after start date, you have a choice :-
1) Leave the VAT at 17.5%, and account to HMRC for that
2) Reduce the VAT rate to 15%, account to HMRC for that 15% but you MUST issue a credit note/refund to your customers if you do this.
In direct response to your question, unless it falls into one of those exception cases, you've supplied goods or services prior to 1st Dec, and invoiced prior to 1st Dec, so the 17.5% rate was correct, and you account to HMRC for the VAT at that rate.
Note: I don't practice as an accountant, and the above is opinion and my understanding, not advice. If you aren't sure, check with your accountant or HMRC. They have some advice here.
If you get a VAT invoice which shows the real price (plus tax) then I uspect you will get the reduction, but where retailers sell VAT inclusive prices, I guess that they will will keep the prices the same, pass on the 15% to the government and pocket the rest - cost neutral to the consumer, a small increase in profit for the retailer. Part of the problem is that (unlike the US) retail prices are advertised VAT inc. Imagine the situation if (say) petrol was adverised plus tax so you could see just what a huge amount of the the cost of a litre is actually duty and tax!
appears scan have just added to their margins instead of passing on any savings =/ their 1tb samsung f1's seem to be the same price as they were last week with 17.5% as they are today with 10%
Not entirely, I've noticed the BFG GTX260 Maxcore (even though on pre-order) go from £258 to £252 which is in line with the cut. It might be on some products but so far I've seen most of the items in my basket go down by quite a few £'s.Quote:
Originally Posted by DragonStar
:thumbsup:
perhaps its just coincidence then and the base price has increased due to the crappy exchange rate
It could be. I didn't note the prices of the hard drives.Quote:
Originally Posted by DragonStar
Well the GFX card I was looking at yesterday is exactly the same price today on EBuyer. VAT is right, so they took the VAT cut to profit.
Hmmm, who would of thought cutting vat by 2.5% absolute, wouldn't kick start the economy..... How about everyone?
Yes, it's complete bollox. Firstly, as we've seen, the 2.5% VAT cut isn't going to translate into a 2.5% reduction on prices. Secondly,, it isn't going to change the perception that people may not have work tomorrow and so are less likely to spend. Thirdly it isn't going to stop banks being much tighter on credit. Who is going to benefit from this then? Those who don't have to worry about work or credit, and who want to make big purchases that have VAT in them. The filthy rich. A great move from a supposedly Labour government.