Get spending to beat the VAT hike
It's not often Moneywise encourages you to spend but with VAT set to rise from 17.5% to 20% on 4 January, if you're thinking of making any major purchases now is the time to do it.
Just in case you need any more convincing, Moneywise has done the calculations to show you the price of goods and services before and after the VAT rise.
It's true that the new year will bring the January sales, but pre-Christmas sales on these sorts of goods are increasingly common as retailers compete to attract Christmas shoppers. Why not avoid the January frenzy and buy your new technology now?
Packard Bell laptop
Price currently: £499.99
Price in January: £510.62
Samsung Plasma TV
Price currently: £999.99
Price in January: £1,021.26
Try our new VAT calculator to find out how much you will pay after the VAT rise on 4 January.
What is it about sofa companies and sales at this time of year? DFS, for example, has a half-price winter sale and guarantees delivery before Christmas.
DFS Kenzie range three-piece suite
Price currently: £2,524
Price in January: £5,181.53*
Saving: £2,657.53 (£129.53 VAT saving)
* furniture goes back up to pre-sale price
You might think it's too late to get any home improvements - like new carpets or double-glazing - done before the end of the year but you might be surprised. While you may not get the work done this year many firms will be prepared to honour this year's VAT rate if you accept a quote before the new rate kicks in. Given that this is one area where VAT hits hardest, it's worth investigating if it saves you a few hundred pounds.
Central heating installation
Price currently: approximately £4,700*
Price in January: £4,800
* based on a 3-bed semi, including radiators and labour costs
Price currently: approximately £3,500*
Price in January: £3,574
* based on a 3-bed semi, with basic carpet fittings
SONY VAT CASHBACK DEAL
Electronics retailer Sony is promoting a 'get the VAT back' offer on some of its products. To take advantage of the deal, you'll have to pay the full price initially, either online or at a participating store, then fill in a form and submit it before 31 January 2011.
You can download the form from the website, sony.co.uk, or get one in-store. It could prove worth your while: for example, a £1,799.99 3D TV would cost £1,531.91 without the VAT – a saving of £268.08.
For a list of participating retailers in your local area, go to the website and enter your postcode. If you have any more queries regarding this deal, contact Sony's special promotions line (01379 649 999).
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.