/ Money, Shopping

Are you buying now to avoid the VAT hike?

Woman sitting with shopping bags

In case you’d forgotten, VAT is on the rise next year. Climbing to 20% in January, your major purchases could come with a bigger price tag. Current spending suggests shoppers are trying to beat it, but is it on your mind?

The emergency budget introduced a rise from the UK’s current 17.5% VAT rate to 20%. When you look back to 2009’s 15% rate, that’s actually a significant bump, even though it was short lived.

So is the VAT hike on our minds? Are we actually all out there panic buying 3D TVs, cameras and video game consoles? Well – despite the fact that you’ve got little interest in 3D telly – apparently we are.

High streets enjoyed a nice little bump last month, according to the Office for National Statistics, with October turning round the decline of previous months. Online spending saw the biggest boost, with £5.2 billion spent online last month, up from 23% last year.

So is this boost in part due to our attempt to beat the VAT price hike? It could well be, especially considering there are (admittedly small) savings to be had – such as £20 on a £1,000 TV, or £320 on a £15,000 car.

Still, sales aren’t that excessive, suggesting that we’re still being careful with our cash, tightening our purses on non-essential items. Our deputy money editor, Nick Cheek, commented on our current spending habits:

‘People may well be spending more ahead of the January VAT increase, but it’s doubtful that it’s uppermost in most people’s spending decisions.

‘If there’s something you need, you’ll obviously save money by getting it before the rise, but it’s likely that retailers will have ‘last year’s VAT rate’ sales early next year to get us back into their stores.’

So are you thinking about the impending VAT hike and making your big purchases this year? Or is it the same old story of ‘I’ll buy something either when I want, or when I can afford, it’?

Comments
Member

My husband and I moved house four months ago and he wanted to take time to do the house up (needed new kitchen, bathrooms, carpets etc – house only 15 years old but had been badly neglected) but I have insisted that the work be done before the VAT hike as it will save an awful lot of money. Thankfully, he saw sense and everything will be done and paid for before the VAT goes up. I do understand that I’m maybe doing the government out of some money but as a pensioner I cannot afford the extra money.

Member

Frankly I was already tightening my belt and the VAT rise announcement just made me tighten it even more! I shall be buying as little as I can of everything and only buying anything at all if it’s totally essential.

The one purchase I have made which is not completely essential, and in many ways against my own better judgment, was a TV, but in that I have “downsized”. I have a very good 21 year old Hitachi TV, with a 26″ screen. Sadly, ever since I introduced CFL bulbs into my home, the interference from these lamps upsets the TV and the picture sometimes disappears. This annoys me greatly as it’s rules and red tape that forced me to have these lamps and now they’re spoiled a good telly.

Anyway, that aside ….

My local independent department store, Atkinson’s, had an offer on TV’s where they are paying the VAT this week and next, so I have bought a Panasonic 22″ LED widescreen TV for £149 shelf price, with the VAT taken off at the point of purchase, making it just over £146, charged to my Atkinsons’s card which gives me 2.5% off if I pay my bill in full at the end of the month, so I’ll actually pay slightly over £145 for it.

As it comes with a 5 year guarantee and my old set may not have lasted 5 years (or it may have done another 25?) I think this is not too bad a purchase but to be honest I bought it because of the combination of discounts NOW, not to avoid the VAT next month – I’d just not have bought one at all if the offer had not been on now.

Member
Sophie Gilbert says:
21 November 2010

Luckily I don’t need anything just know, so I won’t be rushing to the shops, but VAT at 20% will make me careful with my money even more than before.

Member

People talk of a VAT increase of 2.5 per cent but we should remember it is actually a tax rise of over 14 per cent and that we will have had a 33 per cent tax increase in little over a year. It’s quite an eye-opener to review the till receipt following the weekly household shop and see how much VAT we are paying on essentials like washing & cleaning products, toiletries & toilet tissue, and VAT-carrying foodstuffs [not true necessities, but life is bleak without them]. With interest on savings running at very low levels it seems to make sense to make forward purchases of everyday items subject to VAT and carry a good stock into the new year [so long as you can afford to, have the storage space, and do not increase consumption]. And the VAT rise is a useful trigger to make a new year resolution to be a little bit more economical with everything [without becoming a totally parsimonious meanie of course]. It’s amazing how little you need to use of many good products in order to get satisfactory [or indeed excellent] results, so as well as continuing to “make do and mend” it’s time to “make a little go a long way”. We are also reviewing our purchases of imported goods in order to redirect the spending to home production – “every little helps”. Touch of the wartime spirit here I think.

Member
Blanche Brough says:
25 November 2010

I truly believe that an increase such as this should have been linked to luxury items only, companies and industries need a boost to buying, but I am sure there will be a major slow down in buying more than usual post Christmas. As a pensioner any goods that need replacing will not be purchased until perhaps they are faulty and dangerous, I am quite fearful of the rise.

Member
Googie says:
12 January 2011

Beat the VAT rise buying and selling second hand items.

Everybody is trying to save money in the current financial climate and with the recent VAT increase people have reduced the amount of items they purchase even further. This is great if all you wish to do is save money, but realistically we still want to buy treats for ourselves and not just earn money for the government!

Buying second hand items will save you money whilst also avoiding the VAT hike on those items you really want. As most sellers of second hand items are not VAT registered, all used and second hand items they sell are exempt from VAT, saving you the additional 2.5% that shops and online retailers have to charge. With the additional savings you will make buying second hand and unwanted items, make this the most sensible option for buying and selling in the current financial climate.

Online classified ad websites now make it much easier to find second hand and unwanted items from thousands of sellers, helping you save more. With most services like Job-Lot.com offering sellers the option of detailed descriptions, photos and a ranking service, you can be sure you are buying quality items from reliable sources.

So why not take advantage of massive savings whilst also avoiding the VAT increase like thousands of other people buying through online classified ads. Small businesses can also benefit by purchasing second hand and unwanted equipment through classified ads. And with many small businesses going bust under the current financial pressures there are many bargains out there to help your company survive.

With the added benefit of raising extra income by selling your second hand and unwanted items through online classified ads could help you survive the current financial climate.

So start saving now buying and selling second hand and unwanted items via online classified ads like Job-Lot
Don’t just flog it, Job-Lot it!