Will VAT Increase Affect Your Shopping?

VAT is going back to 17.5% from tonight, but many retailers, pubs and restaurants are eager not to let this put us off our post-Christmas shopping and carousing, in many cases “graciously” not passing on the increase to their customers.

The Guardian has done some research into some of the leading retailers to see what their policies are for the VAT increase, and as you can see, it varies quite a lot:

  • Amazon Applying price increases to all items subject to VAT from midnight on New Year’s Eve.
  • Arcadia Group (includes BHS, Topshop, Dorothy Perkins, Burton): Absorbing the increases so prices will not rise for consumers.
  • Argos Prices will not be adjusted until the launch of the new catalogue near the end of January.
  • Asda Increases on some goods, but more than half of VAT-liable items will have prices held including all George clothing
  • Boots Will gradually review some prices throughout the early part of the year
  • Carpet Right No change to prices of current stock but future policy not set.
  • Carphone Warehouse Handset prices will increase to follow the VAT rate changes, but contract pricing will vary according to network.
  • Debenhams Increases will be phased in through January with promotional vouchers cutting cost of all VAT for first three days of the month
  • DSG International (PC World, Currys) Not announcing plans before New Year’s Eve.
  • HMV Aside from high-ticket items such as technology products, many prices staying the same.
  • John Lewis Holding prices until at least the start of February: it has to be the last retailer to increase prices because of its Never Knowingly Undersold promise.
  • M&S Has been reducing prices of clothing, home and gift products at the till during the last year so ticket prices will remain the same. Food prices will increase from 11 January on relevant products.
  • Next Current ranges and sale items will continue at same prices with new spring and summer collections reflecting new level.
  • Sainsbury’s Not increasing prices on goods within Tu clothing, homeware and electricals ranges, as well as CDs, DVDs, games and any products currently on promotion on store and online.
  • Slug & Lettuce pubs Will adjust menu prices to reflect VAT rate increase.
  • Tesco Prices will rise, but VAT frozen at 15% on thousands of products with £12m worth of savings
  • Wetherspoons Drinks and food will rise by about 5p to 10p at some point in January, but a handful of meals and drinks will have VAT frozen.
  • Yate’s bars Will not be passing the increase on to customers in the new year.

In reality, this is all a big marketing ploy by the retailers – certainly there are some big savings to be made on large items (cars, sofas etc) but the first question you should be asking yourself is whether you need and can afford the items in the first place, if you can, then see whether you can get it slightly cheaper before the VAT goes back on.

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