VAT cut stretches indies


High street multiples and network retailers have passed on Chancellor Alistair Darling’s 2.5 per cent cut in the VAT rate.

Darling’s 2008 pre-budget report saw VAT cut from 17.5 per cent to 15 per cent in a bid to increase customer spending in the UK.

Carphone Warehouse and Phones 4U reduced prices further on the announcement, having already slashed prepay prices ahead of December and the Christmas rush.

Orange and O2 also confirmed the new rates will be translated into better deals for punters.

A Phones 4U spokesperson said: “We understand at this time, and especially in the lead up to Christmas, every penny counts. We are still currently in discussions with our network partners regarding how they plan on implementing the rate cut.”

A Carphone spokesperson said: “Our customers finances are under pressure. The government’s move is a step in the right direction and we will pass on every opportunity to ease their burden.”

But smaller retailers looked to hold onto the rate cut for themselves.

One London dealer said: “The cut is designed to give confidence to the spender, but it is really there to help us.  Will I reduce my charges? We will have to see, but I don’t think so.

“The average spend on a prepay handset these days is around £100, so a drop of 2.5 per cent VAT isn’t a massive incentive. The big retailers will use it well, but I would rather use the reduction to help reduce the amount of VAT I pay.”

Fonehouse managing director Clive Bayley said: “I cannot see it making that much difference to the consumer.  It’s more about how it may help business pay less VAT.”