Can we discuss the mini budget coming today?

[Rich]

I see that the January sales have come early, but listening to the budget statement this afternoon, I see that the pantomimes have started early too. :lol:

Rich.

 

[Digit]

:lol: :lol:

Roy.

 

[Digit]

Well let's nail this down to actual money. I'm currently paying £1.05/lt for unleaded petrol, assuming no increase at the refinery gates, what will I be paying next week? Anyone know?

Roy.

 

[Peter T]

Well let's nail this down to actual money. I'm currently paying £1.05/lt for unleaded petrol, assuming no increase at the refinery gates, what will I be paying next week? Anyone know?

Roy.

Should be the same!!

 

[Digit]

I could be totally wrong on this Peter, I admit that I don't know, but assuming that the VAT drop exactly balances the increase fuel duty at the pump, I reason it this way.
When Shell deliver to my local filling station they will burn diesel fuel to do it, they will, I imagine, have to pay the extra fuel duty, but they reclaim the VAT!
That equates to a rise at the pumps!
And surely this applies to any business that reclaims VAT?
Am I right?

Roy.

 

[gatesmr2]

Not being political just looking for honest answer.

Ok we are in a bad state at the moment as a country or even the world, but i was always taught and lived by if you can't afford it you don't buy it Principal.
I can't see how making us spend more money will help, surely what we need is to admit we have a huge problem and basically suck it up and ride it out. As all i can see we are doing is just storing it up for the future.
About three years ago i was diagnosed with a serious illness so my life changed job, car, house etc etc. I would love to be riding around still in a nice new car but i now have a "P" plate ford escort diesel and have made quite a few other cut backs so as to live within my means.
Just my opinion but i can't see how we can get out of this problem without some suffering at some stage be it now or in the near future.
Fundamentally the whole Consumer credit buy now pay later has come back to bite everyone in the a...e may be old fashioned but do we really need all the shinney new T.Vs etc ( i know shinney new routers etc are needed not going totaly over the top here lol) just because its new does not mean it is better. I would love to get a large flat screen T.V but can't afford one so have a normal set.


Martin

 

[p111dom]

Ok we are in a bad state at the moment as a country or even the world, but i was always taught and lived by if you can't afford it you don't buy it Principal.
I can't see how making us spend more money will help, surely what we need is to admit we have a huge problem and basically suck it up and ride it out. As all i can see we are doing is just storing it up for the future.


Martin

The problem is that if you don't buy stuff the retailers close down, manufacturers reduce production and lay people off, don't need the raw materials to make the products so miners etc get layed off and so on. Less products being bought means there's less to deliver so truck drivers get layed off, less fuel is bought so the share prices fall effecting savings and pensions etc. Any government would have the same choise. Do nothing and pay out billions in benefits to the newly unemployed or pay out billions up front and keeps the jobs which is politically more desirable. The financial costs one way or the other are probably very similar. We probably are to a certain extent, storing things up for the future but personally I think it's a dammed if they do dammed it they don't situation. All I know is that I'm in the most persecuted financial bracket so it will probably bite me pretty hard in 2010-11.

 

[Mark Hancock]

I could be totally wrong on this Peter, I admit that I don't know, but assuming that the VAT drop exactly balances the increase fuel duty at the pump, I reason it this way.
When Shell deliver to my local filling station they will burn diesel fuel to do it, they will, I imagine, have to pay the extra fuel duty, but they reclaim the VAT!
That equates to a rise at the pumps!
And surely this applies to any business that reclaims VAT?
Am I right?

Roy.

There seems to be some misunderstanding about how VAT works. Businesses who are VAT registered don't benefit financially ie their bottom line (profit or loss) is in no way affected by VAT. Being VAT registered simply means you act as a tax collector on behalf of the Government of the day paying over or receiving the net affect of your input and output tax (VAT on supplies and income). The way it does affect businesses is with their cashflow and with small businesses the affect of having to charge VAT on sales to customers. This is one of the reasons many small businesses ensure they don't go over the theshold for VAT registration. The increase in sales price by the VAT amount can lead to a net drop in sales because the end user sees the increase in price and can't reclaim the VAT part of it.

 

[p111dom]

There seems to be some misunderstanding about how VAT works. Businesses who are VAT registered don't benefit financially ie their bottom line (profit or loss) is in no way affected by VAT.

That's ture in principle but think of all the retailers like Axminster, Rutlands etc who have recently shelled out thousands on new catalogues only for all the prices to be obsolete with just a weeks notice. Surely that must incur a loss of sorts due to a short notice adjustment in vat.

 

[Mark Hancock]

There seems to be some misunderstanding about how VAT works. Businesses who are VAT registered don't benefit financially ie their bottom line (profit or loss) is in no way affected by VAT.

That's ture in principle but think of all the retailers like Axminster, Rutlands etc who have recently shelled out thousands on new catalogues only for all the prices to be obsolete with just a weeks notice. Surely that must incur a loss of sorts due to a short notice adjustment in vat.

Normally you will find somewhere in the Terms & Conditions reference to the affect of changes in VAT. Quite often companies quote net of VAT which I know is frustrating for those of us who aren't VAT registered but it does get round changes in VAT rates.

 

[p111dom]

Normally you will find somewhere in the Terms & Conditions reference to the affect of changes in VAT. Quite often companies quote net of VAT which I know is frustrating for those of us who aren't VAT registered but it does get round changes in VAT rates.

That's a good point. I wonder if Axminster and others go to ex vat prices on their next catalogues. Doesn't help them now though.

 

[Mark Hancock]

Normally you will find somewhere in the Terms & Conditions reference to the affect of changes in VAT. Quite often companies quote net of VAT which I know is frustrating for those of us who aren't VAT registered but it does get round changes in VAT rates.

That's a good point. I wonder if Axminster and others go to ex vat prices on their next catalogues. Doesn't help them now though.

Quite possibly with the present economic uncertainty. The present reduction VAT is hoped to stimulate the economy. It may be that reducing it by 2.5% doesn't have the desired affect and it may be altered again. Who knows :?:

 

[Digit]

Okay Mark, so quantify this for me and see if I understand correctly.
I assume that my local council has to pay VAT, which they will reclaim, that being so the 2.5% will have no impact. But, they are heavy users of fuels, which have risen due to the increase in tax. Correct?
If that is so then I can expect them to pass the increase on to their customers, to whit, me!

Roy.

 

[Mark Hancock]

Okay Mark, so quantify this for me and see if I understand correctly.
I assume that my local council has to pay VAT, which they will reclaim, that being so the 2.5% will have no impact. But, they are heavy users of fuels, which have risen due to the increase in tax. Correct?
If that is so then I can expect them to pass the increase on to their customers, to whit, me!

Roy.

I think you are getting the two confused, VAT and Fuel Duty. As I said previously the changes in VAT have no changes on the financial position of the business/council but will on the non VAT registered end user. But I believe the increase in Fuel Duty will increase costs for a business or your local council which they may then decide to pass on to the end user. I'm happy to be corrected on this last point.

 

[BradNaylor]

This is one of the reasons many small businesses ensure they don't go over the theshold for VAT registration. The increase in sales price by the VAT amount can lead to a net drop in sales because the end user sees the increase in price and can't reclaim the VAT part of it.

I had been VAT registered for the last 20 years or so; however since downsizing last year I now trade under the registration threshold and so no longer participate in the process.

I have found this to be worth an immediate £130 or so extra profit in my pocket every week!

This is because I am able to charge exactly he same prices to my customers as I did when I had to charge VAT. So the 15% or so of my turnover that I had to declare to HMRC now remains with me!

OK, so I can't reclaim the VAT on my purchases, but as these amount to no more than 20% of my turnover anyway I'm quids in.

My advice to anyone with a business supplying services to the general public is to avoid VAT registration at all costs! Keep your turnover below £68,000 per year.


As far as the reduction in the VAT rate is concerned, I don't see it making any difference at all. Most retailers will simply see it as a way of increasing their margins.

Retailers offering goods at a gross price (ie including VAT) are under no onus whatsoever to reduce their prices just because the VAT rate has changed. They simply have to account for their sales to HMRC at the rate pertaining on the day of sale.

It suits me anyway because all my business purchases just got a bit cheaper



Cheers
Dan

 

[Digit]

But I believe the increase in Fuel Duty will increase costs for a business or your local council which they may then decide to pass on to the end user.

So in other words another Darling tax 'cut' is a tax rise!
I don't think I can afford too many more tax 'cuts'.

Roy.

 

[Mark Hancock]

As far as the reduction in the VAT rate is concerned, I don't see it making any difference at all. Most retailers will simply see it as a way of increasing their margins.

Very possible with such a small reduction in VAT

Retailers offering goods at a gross price (ie including VAT) are under no onus whatsoever to reduce their prices just because the VAT rate has changed. They simply have to account for their sales to HMRC at the rate pertaining on the day of sale.

So true. It's always amused me when I see sales promotions advertising goods reduced by the VAT amount as though the shop has decided not to charge VAT. If only

 

[Mark Hancock]

But I believe the increase in Fuel Duty will increase costs for a business or your local council which they may then decide to pass on to the end user.

So in other words another Darling tax 'cut' is a tax rise!
I don't think I can afford too many more tax 'cuts'.

Roy.

I believe the Fuel Duty increase was decided in the last budget. There is a trend these days with budgets to announce increases which then take affect sometime in the future, may be in the hope they then won't be as noticable or may be even forgotten about rather than applying them at the time of the budget.

 

[Digit]

Which is a little duplicitous of course.

Roy.

 

[Mark Hancock]

Which is a little duplicitous of course.

Roy.

What politicians. Never :!: :lol: