I remember a film where someone did something similar. They took all the odd half cents (America) from a big companies wages and directed it into their bank account, and yes they became very rich very quickly. So in a large company it will make a big difference.

G Brown spouts regularly on helping 'small' businesses, if manipulated correctly, this cut could help as you say the larger companies, I fail to see how the cut helps small businesses or normal people.

i am not talking about small family type shops

it was just a thought about large mail order companies many many thousands of items totally amounting a million or 2 £

which would mean coppers per sale multiply by many thousand you would have a little less than . 21/2 % of say 1,000000

£25, 000 would pay for their christmas do .

What a minefield VAT is!! .

At the moment I sell prepackaged sweets pricemarked at 99p . As of Monday they will still be 99p, no matter what.

Just give a thought to the 99p shops, will they now be renamed for 13 months as the 97p shops? I dont think so . The fact is that while the reduced VAT will effect high ticket items it will have no effect on day to day purchases.

hi thanks for that

there are companies who take details including the amount but don't invoice until dispatched so that could work . i not really talking of single invoices , but thousands of small amounts . i don't think they will be reducing the vat amount and send to customer or reduce price do you

Hi the answer to your query is on www.hmrc.gov.uk
Look under pre budget report 2008 VAT rate changes. You will find that payments in advance can be adjusted, and invoices made before delivery of goods i.e orders for goods to be supplied on or after 1st Dec will attract 15% not 17.5%.

I believe VAT should be charged as at invoice date. Invoices made out this month will show the old rate, even though payment may not be received for some time. Payments in advance should be invoiced as at date received or paid in. I'm sure there will be some who will try it on though! The VAT receipt/invoice should show the rate and date charged so the customer will know if this has been done.

It is not worthwhile holding off pre-invoicing, especially to businesses, as that could delay payment another month. Most businesses are reclaiming the VAT anyway so it is irrelevant.

However, any amendment to sales tax rates which is not immediate is likely to be open to misapplication.

Sylvia C

Hi another thought :-

I would assume those who have ordered high valued items for del this month will ask to have them next month to save on vat .

also there is another thing unless i am wrong on how vat works.

those companies who have orders to send out (already paid for ) tell their cust there is a slight delay and send then in dec , and when they send in their vat return , keep the difference between the amount 17.1/2 % charged on the sale to 15% that they will pass on to the vat people .

help am i right on this

In Britain many things such as some of the basic foods above are zero rated, books & newspapers are zero rrated. Gas & Electricity are 5%, possibly some others.

What is all this about EU rules and 15% minimum - presumably the 'standard' rate which can be defined how ever each country chooses?

Sylvia C

EU regulations are that VAT cannot be taken below 15% for certain items.

In Spain the VAT on basic food items such as potatoes, fresh fruit, fresh vegetables, eggs & yogourts is 4% (category A); items such as butter, pizzas, pepsi & potato crisps is 7% (category B); items such as clothes or suncream are 16% (category C).

There is no reason why the same couldn't be done in the UK.

Because of EU regulations VAT cannot be taken off any product that it is currently on. As other correspondents have said the government cannot take VAT below 15%.

All this will do is cause a headache for us shopkeepers in working out what to do. As most small businesses , I do not have an army of IT experts, accountants etc to sort this out. Just me. That means in practice a lot of next Sunday will be taken up sorting out prices and accounting systems. So much for supporting small business!!

This governments current debt repayment is around £33 Billion per year . In a few years time where will it be? What I will predict is that the current government will all be in retirement on fat pensions and the mess will have to be sorted by the next generation at westminster.

I logged on to see if anyone had pointed out that it's 2.13% reduction which commentators keep getting wrong - glad someone has, but read through all and am not surprised that ALL postings here are in agreement that this VAT cut will make no difference, other than to extend our nation's ridiculously high level of borrowing.

To defend those who don't make the reduction, we're a small non profitable publisher, so no VAT on books. (I'm on less than minimum wage as it's my own company and the money isn't there to take). I've tried creating & selling budget notecards for our Greek-o-File book subscribers, on which we must charge VAT but make very little profit. Costs have gone up over the last 3-4 years since we started, but I kept prices the same as I didn't think they would sell for more. The market determines the price - which is why High Street shops have been offering 20% off hoping to get a smaller profit from higher sales. Now I'll get back 2.13% towards the extra costs of postage, printing, paper & envelopes over these last few years. Perhaps this is helping small businesses - but not much.

I agree with the respondent above who said removing VAT on gas & electricity would have been more useful. I wonder how the sums compare on national scale?

What is the point of proposing higher taxes AFTER the next election. It means nothing. Surely the abolition of the ceiling on employees NI would have had a better effect and why not instantly. People with more than average salries can afford to pay now. Low income people (especially if they don't have children and rely on interest on low levels of savings) need to eat and keep warm now. Why wait till 2011/12? Why not have just one tax scheme covering NI & tax and be honest about tax on income. There could be a lower tax rates for retired people to compensate for not paying employees NI now.

What about no corporation tax on the first £5,000 business profit per annum - not just deferring another 1%.

Is anyone in government actually listening to all the sensible ideas the public have. We have to manage our own budgets & can't just borrow when there's nothing in the kitty, so we do understand. Those who need to borrow to keep business afloat should be helped.

Sylvia C

Too late BFB! Labour has already ruined our Country and generations will be paying for their miss-management. When will we ever learn that Labour always leaves this country in a mess.

I agree that this 2.5% is not going to make any real difference as it is too small a change and people are not spendiing due to job loss fears. The money would have been better spent on bringing forward capital projects which would at least have had a long term benefit and created jobs.

Also one thing that seems to have been forgotten is that most pricing is fixed at price points e.g. £9.99. Retailers are not going to change these to say £9.78 to reflect the VAT reduction as this is not a price point.

The VAT reduction was more a political move than an economical one which is not what is needed!

If Labour robs Peter to pay Paul.......who is Paul foolishly going to vote for? How this Government must love this credit crunch excuse to hide their books and muddy the waters so that its difficult for anyone to see where they have wasted so much of our money over the last decade. Where has it all gone? If you are going to leave a sinking ship it doesn't matter how much you have overloaded it.

Totally Brilliant !!!!!
Virtually no benefit to the consumer and businesses have the headache of changing all their accounts systems to accomodate the new rate.
It's not just a matter of changing the VAT content now but also making sure that any future refunds/credits are given at the correct rate.
And how long before we have to go through the whole process again?
Yet another piece of wonderfully 'joined-up' thinking ..... NOT !!!!!