Great*, The VAT Rate has changed from 17.5% to 15%.
*Great as in, I'm not sure if I like it or not!
I think that may actually help the economy but for a different reason to what Alistair Darling may expect.... it means that all of our printed price lists will be out of date in less than a week so will have to be reprinted - anyone want to by shares in a printing business?
For my business that's not too bad because we print our own price lists as we need them. Several of our suppliers though provide price books - one of which only changed their prices in October and normally they plan at least 6 months before the next price change.
So, what happens? Well, I imagine they will announce a price increase for the 1st December which just happens to be in line with the reduction in VAT. If they don't it means paper and ink sales will suddenly increase next month, graphic designers will have the fun job of updating each individual price.
I get the fun job of updating all of our computer code - the chances are high that somewhere is a hard coded calculation on VAT so every price update I do from now will need to be checked, even if I automated the update routine. Seriously, I doubt that every product in sainsbury's or Tesco's will fall by the VAT difference - why should they change the price on the shelf? They'll leave it the same and make a little more profit.
Our customers will benefit, the guidance on the HMRC web site is that we can credit and reinvoice at the new rate any products that we have not delivered before 1st December. They'll get a refund if they've paid already or owe less when the job is finished. I still have to go through each sales order though, yet more time lost in paperwork. Hey ho, at least we've had a really good November and maybe the thought of cheaper prices will encourage more people to go out shopping.
Anyway, in case you are wondering what the difference actually means;
117.50 including VAT = 100 excluding VAT = 115.00 at the 15% VAT RATE
100 including VAT = 85.11 excluding VAT = 97.87 at the 15% VAT RATE
So, for every 100 you'll save 2.12p using the new rate.
To work it out using a calculator to get the excluding VAT rate, divide by 1.175.
To add VAT at 15% multiply the ex VAT price by 1.15