After 13 months at 15%, the rate of VAT is going back up to 17.5% on January 1st 2010, which will cause a headache for retailers and consumers alike. Like most retailers, Printware will not be increasing the cost of its goods on January 1st but the amount of tax you pay on these goods will increase. As an example, a printer costing £500 ex. VAT would be £575 inc. VAT at 15%, whilst at 17.5% the total cost inc. VAT would be £587.50.
It’s customary to blame retailers for the price increases and ask why the increase has to be passed on – in short, the retailer merely collects VAT on behalf of Revenue and Customs and never sees any benefit from it. Printware will not make one penny of extra profit as a result of the VAT increase.
Most businesses are, of course, VAT registered and will be able to claim the tax back anyway. However, if you’re not VAT registered, now is a good time to make that printer purchase or stock up on those toners before you have to pay the taxman extra for the privilege.
by Anthony Morgan