Mutterings of a Fool

Man, Dad, Runner, Chief dog walker

VAT – who cares?

It has struck me over the past few weeks how many people have complained about VAT going up. Do people really see the increase to 20% as having a material impact on them? Or is this just something to complain about and hit the coalition government with? (we do love to complain don’t we?!) If the papers and retailers were to be believed we should have all been rushing out to madly purchase every large item that we were planning to buy in the next 5 years. I didn’t feel that urge did you? From where I sit it doesn’t really seem like a big deal.

A necessary evil

I don’t want to get into the why’s and wherefore’s of the current economic situation, but we’re here and we now need to deal with it. The government and us ordinary folk have too much debt, fact. We filled up on loans and credit in the good times and forgot that it wouldn’t last forever and some day it would have to be repaid. If we are to have a sustainable future this needs to be addressed, the government needs to stop borrowing to meet its financial needs and start spending what it has (a lesson I’m also trying to learn).

This means cutting spending, which of course is going to be painful and every budget cut will affect someone. Some I really don’t agree with, the armed forces for example, others like improving the benefits system appear to make sense and should hopefully help people get off benefit and back into work. But the government also needs to try to increase revenue, which means taxes in all their forms. Should this be aimed more at the higher earners? Maybe to a certain extent and we do now have the 50% tax rate, but we all have to foot the bill in some form, after all we all benefitted from the spending under the previous Labour government.

Buying habits

VAT increasing is of course going to cost us more money overall, but I would be surprised if in a few weeks we even remember that it’s changed. Most foods items plus books, newspapers, magazines and children clothes have zero VAT in any case. Even if you buying larger items I don’t think it’s significant enough to change your buying habits. A typical TV would cost around £300, the VAT increase would add £7.50, is that going to stop you buying it? I would guess not. Plus of course most retailers have a virtually never ending sale of some sort where you are likely to save 15% or more, easily offsetting the VAT increase.

The same can be said for increases in fuel duty, diesel is now more than 130p, have I stopped driving as much? Not really, I think it would have to get over 150p before people really start cutting down.

The fools’ solution

The solution is pretty simple really, forget about the VAT rise and focus on buying only what you need and as cheaply as possible. If you are going to buy something, no matter how large make sure you get the best deal possible. For big items use price comparison sites, see if you can get cash back on your purchase via one of the many cash back sites. Check out any interest free credit deals as a way of buying and spreading the cost. Also don’t forget to negotiate, something us British really aren’t that good at. You could save £100’s on your car and home insurance alone if you don’t just auto renew, easily offsetting the VAT increase.

Finally if you don’t already make sure you subscribe to the weekly email from Money Saving Expert, this is the first place I look before I make any large purchase or insurance renewal etc. It’s the best impartial advice out there and completely free! There are guides for all the major purchases/expenses to make sure you are getting the best deal possible.

So that’s my view, do you agree? How have you dealt with the VAT increase?


  1. I’ve heard on the news about the VAT increase and seen adverts encouraging you to buy before the increase but other than that I’m pretty oblivious. HOWEVER, fuel price is ridiculous – some of us can’t cut down on driving so have no choice but to pay.

    But yeah, we British like to complain – why not aim it at the Government.

  2. I agree with you wholeheartedly on the VAT issue – it’s seems to be a good marketing tool for the electrical stores and motor trade but not really something people are bothered about.

    I would say that increases in fuel duty are having an effect on people though. You can’t avoid driving to work in the rural South West but it does impact on other trips. All of our family live 250 miles away and the cost of getting there has become so expensive that we only visited once last year which is sad for the grandparents 🙁 And before anyone says get a train – it costs more and the nearest station to my folks is 50 miles away!!

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