UPDATE: I posted this last year when VAT went up, but with pasties and now jaffa cakes, the many aburdities of VAT keep coming. Here are some more. They were written last year, so the latest budget may have closed some of the loopholes.
Value Added Tax went up today in the UK. It’s a sale tax on goods and services, and today it was raised to 20%. The price of everything just went up by two and a half percent, and this will raise £13 billion for the treasury over the coming year.
As I expected, loads of retailers have been running promotions in the last couple of weeks, urging shoppers to ‘beat the VAT’ by buying before the rise. It’s a particularly popular sales tactic for big ticket items, as my wife and I discovered when we passed an electronics shop yesterday.
The fact is, the VAT rise will add around £10 to a widescreen TV, a fairly negligible sum. Spending before today only makes a big difference if you’re buying something really big, a car or an extension to your home. But I guess it all helps the retailers.
If you really want to beat VAT, you’ll have to be more creative. Here are some ideas:
- Insulate your home – insulation materials are charged at a discounted 5%. Stick it to the man by lagging your loft this winter.
- Choose your pets wisely – VAT is paid on pet food for cats, dogs, hamsters, ferrets and guinea pigs, but not on feed for chickens or rabbits.
- Stop smoking – Nicotine patches enjoy a discounted rate of VAT, while cigarettes are loaded with extra taxes.
- Take a bath – it’s good to save water, but it’s also good to luxuriate in the knowledge that your bathwater is untaxed.
- Buy a caravan – invest in a lifetime of VAT-free vacation. Just make sure the caravan is over 7 metres long, or it doesn’t count.
- Eat fresh – generally speaking, fresh fruit, vegetables and meat are zero rated, while many processed foods are taxed. And learn to cook – VAT is levied on catering and eating out. All fresh herbs are zero rated, except bay trees taller than 50cm high.
- Buy secondhand – VAT only applies to new goods – outsmart the tories in a secondhand suit.
- Take the biscuit – if the chips in your chocolate chip cookies are mixed into the dough, they are VAT exempt. If the cookies are decorated with chocolate chips on the surface, VAT applies. If you want to know the logic of this, I can only suggest you write to George Osborne.
- Read more – laugh in the face of tax rises by buying books, magazines and newspapers.
- Navigate old school – VAT is levied on SAT nav systems, but not on maps.
- Gamble more – Best ignore this one perhaps, but gambling, bingo and the lottery are tax exempt.
- Get a scooter – if you’re after a new car, consider a mobility scooter instead, and out-run Osborne with VAT exempt transport.
- Travel by helicopter – good news! Both the sale and hiring of helicopters are VAT exempt.
- Wear children’s clothes – if you’re small, beat the taxman by shopping in the children’s section.
To explore more ways to beat the taxman, see HM Revenue and Customs’ VAT pages.