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UK VAT to drop to 15%
hunting for those * 1.175s

 12:10 pm on Nov 24, 2008 (gmt 0)

An announcement that UK VAT is set to be "slashed" from 17.5% to 15% is expected in the Chancellors pre-budget report today:
The Times [business.timesonline.co.uk]

Will it make a difference? When will it actually come into effect? Will there be a drop in sales between now and whenever it is actually implemented?

Most importantly, do you know every place that you have *1.175 hard coded? ;)



 12:16 pm on Nov 24, 2008 (gmt 0)

The effective date will be in the announcement. It could be from midnight or any date in the future.


 12:42 pm on Nov 24, 2008 (gmt 0)

Personally id like to see VAt droppped back to a much lower figure or abolished altogether, after all Ive paid tax on teh money im spending when I earnt it didnt i ?


 1:18 pm on Nov 24, 2008 (gmt 0)

OT Essex_boy, but I wold prefer the opposite. Give me the money I earn, and tax me on my consumption. Then high-level earners cant find loopholes to avoid paying tax.

The obvious problems include tourism and cross-border trade.


 1:33 pm on Nov 24, 2008 (gmt 0)

I think that 15% is the lowest it can go under EU rules.

I've found some 1.175s in the weirdest places - odd bits of php code to do with things like Froogle uploads and the like. Our backend database (and I didn't write this bit myself) has the 1.175 nicely in a constant, but changing it will change the value of VAT for every order stored on the system. :)

Think I've got them all now..


 1:37 pm on Nov 24, 2008 (gmt 0)

B&M businesses covered a lot of this when the rate went up to 15%

Calculating the tax on the basis that the rate on the day is the same as the rate as at the tax point is a common mistake.


 2:35 pm on Nov 24, 2008 (gmt 0)

Make no mistake: this vat drop will not benefit the consumer. The only winners will be businesses.

VAT drops to 2.5% to 15%. Do you think retailers are going to drop prices 2.5% or keep the prices the same and skim the extra profit?

OK, a bag of spuds may fall from £1.78 to £1.74 but will a £395 TV fall to £386.55?

Put it another way. Your site sells widgets for £9.99. Will you now sell it to your customers for £9.78?



I agree with the OP. It will be a nightmare search and replacing 1.175.

Lord Majestic

 3:35 pm on Nov 24, 2008 (gmt 0)

It won't work well, typical sale discounts are well over 25%, would 2.5% less make a difference? I doubt it.


 3:57 pm on Nov 24, 2008 (gmt 0)

It doesn't even scale well, on an 8000 car I am going to save less then 200...it won't even pay for the car tax for the year, or one monthly payment on a HP agreement.

It's just activity for the sake of appearing to do something...reminds me of a story I once heard about a guy who sharpened saws for a living and thought he found a great skive, instead of sharpening 10 saws a day, he would sharpen the same saw 10 times...just so his bosses could see he was doing something.

Wonder what Alistair Darling did before he was a minister?!?


 4:21 pm on Nov 24, 2008 (gmt 0)

I agree with the OP. It will be a nightmare search and replacing 1.175.

I am probably going to offend a few people here but if you need to do that then it comes down to a pretty dumb piece of underlying design. Any old dinosaur of a mainframe programmer would have created a single look up table for tax rates.


 4:46 pm on Nov 24, 2008 (gmt 0)

No offence taken - I've been telling myself the same thing :)

It's not a major issue for us. The VAT rate is stored globally and is generally taken from there, but there are these odd places here and there where it has been hard coded by someone (often me) in a hurry.

And I did find it amusing that our offline database stores VAT as a global, but changing it there changes all previous orders... Someone tried to do the right thing, but just didn't quite get there :)

It's been confirmed now. VAT to drop to 15% next Monday (1st Dec).

Agree with those who say this isn't going to make much of a difference, although we will be passing it on in full. The appreciating dollar and depreciating sterling has forced us to raise prices 20% or so across the board in the last few months, so any scope to cut them a bit is welcome.


 4:46 pm on Nov 24, 2008 (gmt 0)

@ piatkow

Agree 100%. Or * 1.00

Then hard-write the values on invoices (rather than a cost * VAT-rate calculation on recall).

@ everyone else
Nope, it is a stupid idea. Better moves include changing it to:
5.75% (an apparent price drop of 10%)
11.625% (an apparent drop of 5% but messy as 3 decimal places or 5 Sig. Figures)

Can you imagine Argos printing a new catalogue? All the B&Ms printing new POS for Xmas? It will just be absorbed.

And given it will do nothing at the front lines, all it will ACTUALLY do is generate lower tax receipts, AKA future tax rises (or lower public spending).


 4:49 pm on Nov 24, 2008 (gmt 0)

although we will be passing it on in full

Yep, thats the great thing about ecommerce. At the end of the day, VAT is just a calculation.


 5:00 pm on Nov 24, 2008 (gmt 0)

Obviously checkout carts and such will have a single lookup rate but there are surely many pages on a site, such as a product review page, or a banner ad where a price has been hand written.

That is the nightmare scenario for us webmasters. The nightmare scenario for the cafe owner, the fruit and veg guy is that they have to spend hundreds painting new price boards!


 7:30 pm on Nov 24, 2008 (gmt 0)

Put it another way. Your site sells widgets for 9.99. Will you now sell it to your customers for 9.78?

Exactly what I was thinking! I've spent ages setting up all my products at nice .99 prices, they'll be a right mess if I change...

Maybe some of my higher price items I will drop, but most of my products are 10 or less, so the savings for my customers will be pennies.

I don't get the VAT drop? The only people that this will benefit are people buying high price items, such as buying a new car. And if you can afford to buy a new car, then I don't think you really need financial help?!



 10:06 am on Nov 25, 2008 (gmt 0)

It will also help for home improvements such as building an extension. A builder will now charge, say, 10,000 + 15% VAT rather than 10,000 + 17.5% which is a saving of 250.

That's a nice saving but how many people do you know are going to start a 10,000+ extension within the next year?

And how many people do you know who drink, smoke, or buy fuel? Everyone, right?

Well they are not going to see the 2.5% reduction because the chancellor is increasing the tax take on those items to compensate for the 2.5% drop in VAT. What a rip off!


One bit of good news for webmasters is that webhosters *should* drop their prices.

Next week the price of a rack server, comms, and electricity costs should come down 2.5% and this cost should be passed on to customers renting servers / space.

Now will the hosters do that or see this as a way of increasing their turnover by 2.5%?

It depends on the billing script I guess. One of my colo servers is 43 + VAT with the VAT applied at the checkout. Next month I *should* see a saving of 1.08. Woohoo.


 10:22 am on Nov 25, 2008 (gmt 0)

One bit of good news for webmasters is that webhosters *should* drop their prices.

But this is only relevant to those who aren't VAT registered. Those of us who are may see prices rise if suppliers/providers keep their inc VAT prices fixed...

This is one reason why we are not going to raise our prices - nearly half of our business goes to VAT registered companies, so it would be an out and out price rise for them.

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