Despite descenting comments condemning the 2.5% hike in Vat as regressive I've always thought the opposite, believing it a fairer alternative to hiking basic rate Tax and/or National Insurance rates as the less well off can avoid paying it on necessities.
This submission by Rosie Murray-West and Kara Gammell on Telegraph.co.uk seems to support that view:
If you're worried about the impact of the increase in value added tax (VAT) to 20pc in this Budget, you're not alone. According to shopping comparison website mySupermarket.co.uk, the tax will add an annual average of £33 to each supermarket shopper's basket when it comes in on January 4. For many families reliant on convenience foods, the cost will be far higher.
That's before you even start looking at the extra costs of petrol, clothes, cars, whitegoods and services. Fortunately for the shopping-savvy, there are ways you can beat the tax rise. That's because VAT is a tax of complications and anomalies, and it's possible to cut it out of a substantial part of your shopping basket.
More than 40pc of shoppers will change their spending habits in response to an increase in VAT, according to research by accounting and business services group RSM Tenon.
If you know what is and is not subject to VAT, then you'll be able to adjust your shopping accordingly.
VAT law is supposed to split your supermarket shop between two categories; essential foods, which are zero-rated so that you don't pay any tax, and luxury foods that will be subject to a 20pc tax.
However, because of the difficulty of deciding what constitutes a luxury item, it's possible to buy very similar products at 20pc less than others because they are VAT-free.
Daniel Lyons, VAT partner at accountancy firm Deloitte, said that VAT law was "like French irregular verbs" because there are so many exceptions.
"It used to look fairly sensible 30 years ago, but economics have changed and new products have come on the market," he said.
Jonny Steel, spokesman for mySupermarket.co.uk, said: "There are some strange discrepancies between the types of foods that qualify for VAT, making it hard to predict where the increase will hit shoppers most."
Top tips for those wanting to avoid the tax rise include buying wheat-based snacks or tortilla chips instead of potato crisps, as well as buying ''freshly baked food'' from supermarket bakeries while it is still warm, rather than ''takeaway hot food'' from the takeaway counter, as this will attract VAT.
When buying gingerbread men, check how much chocolate they have on them – any more than a few dots for the eyes and you will be paying VAT.
Perhaps the most important thing to remember concerns nuts and dried fruit. If you buy them in the baking aisle, you're probably not paying any tax, but if you buy them from the snack aisle you'll be paying the full 20pc VAT. Given that you're probably paying a mark-up for packaging anyway, it makes sense to buy them in bigger bags.
VAT SHOPPING LIST
- Takeaway hot food £1.09
- Cereal bars £1.98
- Partly or wholly chocolate-covered shortbread £1.59
- Crystallised ginger £2.04
- Raisins packaged for snacks 70p
- Squash £1.09
- Potato crisps £1.69
- Ready-made popcorn £2.60
- Prawn crackers made from cereals £1.48
- Shelled roasted or salted nuts £1.15 for 100g
- Ice cream and ice lollies £3.99
- Chocolate-coated biscuits £1.25
- Gingerbread men with chocolate decorations 99p
TOTAL: £21.64
NON-VAT SHOPPING LIST
- Freshly baked food £1
- Flapjacks 73p
- Millionaires Shortbread (with caramel layer) £1.19
- Ginger in syrup £1.85
- Raisins packaged for baking 18p
- Milkshake and flavoured milk drinks 85p
- Crisps made of other vegetables and wheat-based snacks such as tortilla chips 89p
- Microwave popcorn £1.99
- Prawn crackers made from tapioca £1.62
- Roasted or salted nuts still in shells or packaged for home baking 65p for £100g
- Frozen ready meals and baked Alaska £2.97
- Chocolate chip biscuits 49p
- Gingerbread men with a few dots of chocolate for eyes 65p
Given the recent reports on the harmful affects of trans fats I would support Vat being applied to such foods. Again there would be a choice to avoid Vat and be fitter too!
This Posted by Joe Martin providing business services for small businesses and the self employed. Find me at joemartin.co.uk
No comments:
Post a Comment