VAT increase!

**Andy** · 22-06-2010, 04:36 PM

Afternoon all,

Todays budget has seen Osbourne increase vat from 17.5% to 20%, for builders who are vat registered like myself this could be a big blow. Securing work in these times is already difficult with people looking to cut costs when having there building work done. When a company like mine prices for work obviously 20% on a reasonable size job is a big hit so when you get other builders who are not vat registered offering their services vat free then this will seem highly appealing. I guess a lot of these builders will work above the vat threshold fully aware of this and just hope they are not caught out, others will get the customer to buy the materials and then take cash in payment.
Whatever way people do it i can see a lot of builders de registering from vat in an attempt to secure work so certainly from the construction side this move could backfire.
Having said all that i know the government have to get some money from somewhere but i think this could force even more people to work under the radar. Any thoughts?

**cluster13** · 22-06-2010, 04:53 PM

This is terrible in my view, VAT only comes out of the pocket of the man on the street while bigger business just passes it on. i've not seen the budget in full yet but this can only dampen consumer spending over the comming months which in turn reduces profits for retailers and taxes back into to system. a bad move in my opinion.
fortunatly i'm out of here in another 6 weeks, i only hope the exchange rate will have recovered a little by then ?? :(

**pablo** · 22-06-2010, 04:59 PM

Saying nothing

YET

**pablo** · 22-06-2010, 05:16 PM

Seriously tho

,i think it will just lead to more cash jobs all round,more black market working if yer like?
Similar things happened in the 80's under............................................Y UP,the tories,but we'l see

**stevie ellis** · 22-06-2010, 09:11 PM

Originally Posted by pablo

Seriously tho

,i think it will just lead to more cash jobs all round,more black market working if yer like?
Similar things happened in the 80's under............................................Y UP,the tories,but we'l see

Oh aye , thats exactly what is going to happen

**chris955** · 22-06-2010, 09:32 PM

After all the doom and gloom predictions by many on here leading up to this budget I looked at it this morning and though is that it ? If it helps to balance the books long term I really don't see it as a big deal.
I would imagine whoever gets in after KRudds spending spree will have to look at something similar.

**Ista** · 22-06-2010, 10:06 PM

Originally Posted by chris955

After all the doom and gloom predictions by many on here leading up to this budget I looked at it this morning and though is that it ? If it helps to balance the books long term I really don't see it as a big deal.
I would imagine whoever gets in after KRudds spending spree will have to look at something similar.

Yeah but that's exactly why they did it that way - they REALLY heaped on the doom-saying through the media, going on and on about how unbelievable terrible the situations is and how we all have to tighten our belts and it will be so painful. And because they did that, people were expecting much worse and now everyone is pleasantly surprised that it wasn't AS BAD as they made it all sound. And that's not to say that the situation isn't terrible - I think it is pretty scary when you look at the figures for public debt - but maybe they didn't need to big it up quite so much!

That said, I think they could have shot themselves in the foot because this kind of talk really isn't useful when you're in an economy which is pretty blooming fragile. All it takes is everyone to think "hmm ok bit less spending on myself down at the high st" and the UK could slide back into recession again. So I think it was short-sighted (and potentially quite risky) of them to approach in in this way.

And, actually, the budget is still quite a big shocker for certain pockets of society. The capital gains tax will hurt some and, like the OP discusses, the VAT increase is going to massively affect small businesses who perhaps don't have the liquidity to hold on through a protracted long period - growth forecast for the UK has already been revised down again today.

**shark** · 22-06-2010, 10:09 PM

Originally Posted by chris955

After all the doom and gloom predictions by many on here leading up to this budget I looked at it this morning and though is that it ?

until the next budget ,we still have a huge debt ,they are just scratching the surface with this one.

**chris955** · 22-06-2010, 10:13 PM

LOL, I have heard for 20 years yeah but they are just softening us up wait until next time.
I was referring to all the doom and gloom on here rather than the media, 100's of 1000's of jobs will go when they bring down the budget. What exactly will be the catalyst for all those job losses ? The freeze on council tax for 2 years or the freeze on child benefit ? I can see nothing that is going to cost the country 1000's of jobs in that budget.

**Ista** · 22-06-2010, 10:22 PM

Originally Posted by chris955

LOL, I have heard for 20 years yeah but they are just softening us up wait until next time.
I was referring to all the doom and gloom on here rather than the media, 100's of 1000's of jobs will go when they bring down the budget. What exactly will be the catalyst for all those job losses ? The freeze on council tax for 2 years or the freeze on child benefit ? I can see nothing that is going to cost the country 1000's of jobs in that budget.

Hmm ok but not sure that's hugely relevant - just because there are some people (on here or elsewhere) who personally think it's going to be worse than the consensus doesn't make the consensus okay - it's still pretty rough and I think the budget very much reflects that times are going to be tough.