Reduced Vat on Motorhomes

[mike 202]

I assume that the chancellors Vat reduction applies to Motorhomes. So 2.5% off vat does equate to £1250 of a new £50k van, so maybee some of our fellow Motorhomers will benefit. Any new buyers need to make sure that they get the reduction if taking delivery in the next 13 months. Because I doubt that dealers will offer the reduction, on existing orders, without being prompted.

[RupertGS]

mike 202 - 2008-11-25 2:20 PM I assume that the chancellors Vat reduction applies to Motorhomes. So 2.5% off vat does equate to £1250 of a new £50k van, so maybee some of our fellow Motorhomers will benefit. Any new buyers need to make sure that they get the reduction if taking delivery in the next 13 months. Because I doubt that dealers will offer the reduction, on existing orders, without being prompted.

The reduction is actually £1063.83 not £1250. VAT is not 17.5% of the retail price but is 17.5% added to the trade price.

A 50K van is trade £42,553.19, to which you add 17.5% or £7446.81. If you now add 15% to the trade price the VAT will be £6382.98, which, as I said, is a reduction of £1063.83.

If it's any consolation, even the writers in my broadsheet newspaper made the same assumption, which is a bit staggering. You'd think that financial journalists would understand the mechanics of a simple tax such as VAT!

[mike 202]

Should have known better than to quote figures, still thanks for the reply.

£1063.83 is better than nothing.

 

Still anyone thinking of buying large accessories would be best advised to wait until the new rate kicks in.

 

[Tony Jones]

True - and anyone buying ANYTHING of any value from then on should specifically demand the reduction - ask for a VAT invoice to prove it if necessary, you're entitled to one on request for anything that attracts VAT.

 

Many retailers etc are talking about not necessarily passing on the full amount, and even the Govt has only said they should do so "in the round," whatever THAT means!

 

If retailers incur extra costs because of this change, they should hassle the Govt about that, not recoup it by charging their customers a higher tax rate than Darling Alistair does!

[kelly58]

The clever bit is that the Gov will add a levy increase on fuel to cover the drop in Vat but will  not remove it when the Vat moves back to 17.5pc so no drop in fuel prices but an aditional increase next year same old con trick .

I would like to know more about the new Gov savings scheme because if I heard him right he said with the new saving scheme to be implemented for every £1 saved the Gov will add 50p so doe's that mean if I give the Gov 50k it will auomatically increase to 75k if so I will be the 1st through the door  tooooooo good to be true me thinks

[bob b]

Tony Jones - 2008-11-25 4:25 PM True - and anyone buying ANYTHING of any value from then on should specifically demand the reduction - ask for a VAT invoice to prove it if necessary, you're entitled to one on request for anything that attracts VAT. Many retailers etc are talking about not necessarily passing on the full amount, and even the Govt has only said they should do so "in the round," whatever THAT means! If retailers incur extra costs because of this change, they should hassle the Govt about that, not recoup it by charging their customers a higher tax rate than Darling Alistair does!

Bugger !... I ordered a Gaslow refillable system yesterday.

Still, its only money....

[neillking]

As a 'horse's mouth' I wouldn't advise waiting. While very welcome, this 2½% is modest when compared with the pound-euro increases already in the pipeline. I already have many to apply from 1st December and more are due in the new year. Margins are already tight so retailers are unlikely to be able to absorb these extra costs on imports. Best deals therefore will be on current stock. Even UK made vans will be affected soon because of the amount of imported material therein.  The Euro was 1.17-1.18 on Yahoo today but it was 1.25 when most of the current stocks of accessories were imported in late summer so the underlying pressure for price increases will be >5%!

[handyman]

surely it doesnt matter when its ordered etc? Its when the money is payed, as the vat is payed then.

 

suppose they will just make it add up to the same price and pocket the rest....great stuff :-S

 

Its the same with most items, if its £9.99, they will still sell it at £9.99. We will see no difference in our pockets

[naittaw]

I'm puzzled - as usual. When I pay for an item where the retail price is quoted + VAT. The VAT is added to the retail price I pay so how come when buying a motorhome the VAT is charged on the trade price ? Or have I misunderstood something - again ?

[bob b]

You would say that Neill.....cos I ordered it from you !!

[neillking]

Thanks Bob - we need more like you!

We have a huge number of products to price review (about 5000 including all the variants). As a policy we intend to pass on the VAT reduction where possible and practicable. That means starting with the higher value items and repricing taking into account both the reducing VAT and the increases due to the weak pound. You are right that you won't see a reduction across the board and increases in some areas - but that won't be my fault! 

And yes we do look at attractive prices like 19.95 but that isn't a one-way rounding we, and others of course, make some prices tighter to achieve this as well as some a little looser to compensate. In the end retailers of all sizes need a certain amount of gross profit to pay for premises, websites, staff, accountants, finance, advertising, etc. After that we'd all like to have some left over as net profit for us as 'wages'. Some of course manage to 'make a mint' but don't be fooled by these headline cases - most of us make a normal living just like the rest of you!

[RupertGS]

naittaw - 2008-11-25 5:49 PM I'm puzzled - as usual. When I pay for an item where the retail price is quoted + VAT. The VAT is added to the retail price I pay so how come when buying a motorhome the VAT is charged on the trade price ? Or have I misunderstood something - again ?

You've misunderstood I'm afraid. The retail price should be the total price that you pay. So if one dealer sells his product at £10 plus VAT then the retail price is £10.00 plus the VAT, which at 15% will be £1.50.

However, retailers that sell to the public are obliged to quote their prices inclusive of VAT so in the above case the retailer should be advertising his product at £11.50.

The only people allowed to quote without VAT are those selling to other VAT registered people, who can claim it back, so the VAT is irrelevent to them.

My business (I'm a manufacturer) is with the public or with other companies so I must always quote a VAT inclusive price when dealing with the general public. It's not fair that you quote a person £5000 and he only finds out later that he also has to pay VAT.

I realise though that my phrase 'trade price' has been misunderstood. I should have said the tax-free price. Every product has a net, or tax free price and the VAT is added on to that. It is not calculated as a percentage of the total retail price but as a percentage added on to the net price.

[Brian Kirby]

mike 202 - 2008-11-25 4:10 PM .................. £1063.83 is better than nothing. .................

Well, yes, and maybe some light at the end of the tunnel?  For those buying a new Fiat based van, almost enough to pay for one new gearbox out of warranty.  That means it should last - oh, let me see - four years? 

Still, that's clearly not quite what Darling, darling, had in mind, darlings!  :-)

[handyman]

neillking - 2008-11-25 6:08 PM

Thanks Bob - we need more like you!

We have a huge number of products to price review (about 5000 including all the variants). As a policy we intend to pass on the VAT reduction where possible and practicable. That means starting with the higher value items and repricing taking into account both the reducing VAT and the increases due to the weak pound. You are right that you won't see a reduction across the board and increases in some areas - but that won't be my fault!

And yes we do look at attractive prices like 19.95 but that isn't a one-way rounding we, and others of course, make some prices tighter to achieve this as well as some a little looser to compensate. In the end retailers of all sizes need a certain amount of gross profit to pay for premises, websites, staff, accountants, finance, advertising, etc. After that we'd all like to have some left over as net profit for us as 'wages'. Some of course manage to 'make a mint' but don't be fooled by these headline cases - most of us make a normal living just like the rest of you!

all in all i see it as........you'll make a bit more out of the deal, and the customer will get nothing extra

[neillking]

all in all i see it as........you'll make a bit more out of the deal, and the customer will get nothing extra

Err not exactly. I have to pay more for the goods because of the exchange rate. I pass that on to you. At the same time the chancellor gives us (all) a discount and I pass that on to you too. My point was that the extra due to the falling pound is more than the discount on the VAT so prices will on average go up. Nothing to do with me 'making a bit more' at all. In fact my margins have fallen throughout 2008 - mostly due to the exchange rate and us trying to moderate that - so I'm actually 'making' a bit less!

Edit: Several awkward typos!

[handyman]

you must think my heed buttons up the back !

 

Theres been posts on here before about the exchange rate, dealers charge more anyway if it goes against them, its in the contract of sale that the customer normally signs.

 

Any bets the difference in exchange rate will happen to be ............ you guessed it...........2.5% (lol)

 

With the exchange out of it, dealers just see it as a 2.5% windfall

[neillking]

I'm sorry you feel that way about retailers. I won't make it worse by arguing the point but would encourage anyone who is interested in the effect of the exchange rate to view the recent pound-euro graph as found at

http://finance.yahoo.com/currency/convert?from=GBP&to=EUR&amt=1&t=3m

[davenewellhome]

I would expect retailers of bigger ticket items to pass on the 2.5%, we certainly will but I have heard that most small ticket item retailers will keep their prices the same and "pocket" the 2.5% simply because it isn't worth their time to reprice every little item. So your £1.99 tin of deodorant will still be £1.99 instead of £1.95.

 

Another point though is that many retailers have sales on early to try and stimulate some trade, we certainly do. Will an extra 2.5% off make much difference if 10%, 20% or even 25% discounts have already been tabled?? I doubt it!

 

D.

[handyman]

neillking - 2008-11-25 9:21 PM

I'm sorry you feel that way about retailers. I won't make it worse by arguing the point but would encourage anyone who is interested in the effect of the exchange rate to view the recent pound-euro graph as found at

http://finance.yahoo.com/currency/convert?from=GBP&to=EUR&amt=1&t=3m

its a smoke screen, you charge for exchange rate differences (and anything else that is a cost to you), and then the final price you add vat to it. Thats it, you charge 15% vat on that price. Its like talking to a politician (lol)

[RupertGS]

handyman - 2008-11-26 9:03 AM

neillking - 2008-11-25 9:21 PM

I'm sorry you feel that way about retailers. I won't make it worse by arguing the point but would encourage anyone who is interested in the effect of the exchange rate to view the recent pound-euro graph as found at

http://finance.yahoo.com/currency/convert?from=GBP&to=EUR&amt=1&t=3m

its a smoke screen, you charge for exchange rate differences (and anything else that is a cost to you), and then the final price you add vat to it. Thats it, you charge 15% vat on that price. Its like talking to a politician (lol)

I'm totally at a loss as to what you're trying to say here. Are you suggesting that if a retailer or importer is bringing in a product at a cost of £1 but the drop in the value of sterling suddenly makes the cost of that product £1.25, that he should not be allowed to put up the price?

What if it happens the other way? Suddenly, the pound goes up and it only costs him 75p. By your logic he should pocket the difference - or are you only in favour of allowing businesses to reduce prices?

The lowering prices of imported products over the last few years were partly as a result of the strong pound and before you argue about that, look at the price of electrical equipment, TVs etc., they have never been so cheap.

A friend of mine has a couple of specialist hi-fi shops. When VAT went up from 15% to 17.5% he absorbed most of the increase. Products priced at £19.99 didn't suddenly become £20.42! Who can blame retailers if they now seek to recoup some of the enormous expense that Darling has landed them with in having to change catalogues and price tickets etc. for the 'big ticket' items that will have to be reduced.

I think that Dave Newell has made the most sensible comment here. 'Big ticket' items will come down, competition will see to that, and if you read today's papers you'll see that it's already happening. Small itens however, priced at say £4.99 or £19.99 will probably not be changed.

You appear, whatever evidence is presented to you, to be totally anti-business. If you think it's easy and a way to make millions then I would suggest that you start your own company. However, like the employees of Woolworths and MFI, thousands of whom are likely to be unemployed this Christmas, you'll find that it's actually a very tough and competitive world out there.

[handyman]

extremely long answer for something so simple. Where have i said anything other than............

 

 

the costs are added up, plus your profit, then you add vat

 

Thats it, simple as.

 

[handyman]

RupertGS - 2008-11-26 10:17 AM

 

I would suggest that you start your own company. However, like the employees of Woolworths and MFI, thousands of whom are likely to be unemployed this Christmas, you'll find that it's actually a very tough and competitive world out there.

 

 

 

 

i run my own buisness..........but i know vat is vat *-)

 

 

 

[brayn]

bob b - 2008-11-25 5:13 PM

Tony Jones - 2008-11-25 4:25 PM True - and anyone buying ANYTHING of any value from then on should specifically demand the reduction - ask for a VAT invoice to prove it if necessary, you're entitled to one on request for anything that attracts VAT. Many retailers etc are talking about not necessarily passing on the full amount, and even the Govt has only said they should do so "in the round," whatever THAT means! If retailers incur extra costs because of this change, they should hassle the Govt about that, not recoup it by charging their customers a higher tax rate than Darling Alistair does!

Bugger !... I ordered a Gaslow refillable system yesterday.

Still, its only money....

All is not lost. The basic tax point is when the goods are supplied or collected by the customer or become available to the customer. If they charge you 17.5% I would suggest to them that they check the above mentioned tax point with their accountant. Or, for a reasonable fee.....Incidentally, if you want to find the VAT included in the selling price, multiply by 7/47 for 17.5% and 3/23 for 15%.I lectured in accountancy at professional and degree level and found that out of a class of 30 about 2 people would know about 'grossing up' (that the VAT in £117.5 is not 17.5% but (17.5*100)/117.5 %). They were usually the ones who ultimately did very well.

[handyman]

davenewell@home - 2008-11-26 7:06 AM

 

So your £1.99 tin of deodorant will still be £1.99 instead of £1.95.

 

 

D.

 

surely everyone needs deodorant, so it should be zero vat :D ;-)

[Brian Kirby]

brayn - 2008-11-26 11:22 AM

bob b - 2008-11-25 5:13 PM

Bugger !... I ordered a Gaslow refillable system yesterday.

Still, its only money....

All is not lost. The basic tax point is when the goods are supplied or collected by the customer or become available to the customer. If they charge you 17.5% I would suggest to them that they check the above mentioned tax point with their accountant. Or, for a reasonable fee..... Incidentally, if you want to find the VAT included in the selling price, multiply by 7/47 for 17.5% and 3/23 for 15%. I lectured in accountancy at professional and degree level and found that out of a class of 30 about 2 people would know about 'grossing up' (that the VAT in £117.5 is not 17.5% but (17.5*100)/117.5 %). They were usually the ones who ultimately did very well.

Yes, but despite all those fractions and percentages, you do seem in danger of overlooking the central point.  It is the seller who decides the retail price of a good, and not the rate of VAT.

If the rate of VAT changes, there is no obligation upon the seller to reflect that change in his selling price, because he, and he alone, has to account to HMRC for the VAT.

All he is obliged to do is pass on to HMRC the correct amount of VAT, relative to the actual selling price.  If the customer doesn't like the seller's price, he always has the traditional remedy.