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’?