Saturday, 29 November 2008

Effect of VAT Change

This week's talking point has been the Pre-Budget Report and the change in VAT to be implemented from Monday 1st December.  I thought I would provide a quick explanation on how this affects purchases from VS Music Supplies.

Sheet music and books are zero-rated for VAT - this means no VAT applies.  So the price of a book on 30th November will be exactly the same on the 1st December.

Music accessories - reeds, music stands, strings, etc. - are all VATable at the standard rate of 17.5%, 15% from Monday.  In theory, this means that their price will reduce from 1st December.

However, as this is a small part of my business I am not VAT registered so cannot claim back the VAT costs.  This means that since I have already paid for all of the accessories in stock at 17.5% VAT, regrettably my prices will have to stay as they are for now.  I will of course reconsider prices of individual items as and when I stock up again at the new lower rate.

I hope this answers any questions you might have about VAT, if not, please drop me a line.


No comments: