Everybody who lives in the UK should read about the “exceptional” pre-budget report this year. There are some big tax changes which probably affect you. To sum it up, there is a new 45% band of income tax; VAT is falling to 15% for 13 months; excise duties on alcohol, tobacco and petrol are rising.
I wrote about the possibility of VAT cuts two weeks ago. Given VAT is falling from 17.5% to 15%, we should see a fall in the price of goods by 2% from Monday, assuming that the full VAT cut is passed on. In my previous article, I discussed whether retailers are likely to absorb the VAT cuts as extra profit, pass it on as-is or perhaps even cut prices by even more than 2%.
Worth keeping an eye on anyway and not making any big purchases of electronics or gadgets quite yet until we see how retailers are going to react.
For full details, see the government’s full pre-budget report, “Facing global challenges: Supporting people through difficult times”.