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KBzine: the original kitchen and bathroom industry e-newssince 2002
24th November 2017

 

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Shortly after this Government came to power, it was revealed that one of the measures it might take to avert the possible bankruptcy that faced us, would be to increase VAT from 17.5% to 20%.

Those who didn't want the Government to be a success seized upon this as being a sure fire way to bring the country well and truly to its knees by causing a double dip recession because consumers would cease to spend. Many of those in this industry expected a real run on appliances and queues of householders wanting their kitchens and bathrooms refurbished before the rise in VAT would make their project "unaffordable".

Tradespeople were expected to stockpile parts while VAT was at the lower rate, causing problems for their suppliers because they would hardly be spending once it had gone up.

Those of us who've had problems with tradespeople in the past expected that our purchases would be charged out at the higher rate, regardless of the tax that had been paid on them initially.

The Government went ahead anyway and the 2.5% VAT rise is under three months away.

So what has really happened?

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Well according to Screwfix, only one in four tradespeople intend to squirrel away nuts (and bolts) ahead of the January 1st VAT rise!

The fixings and tools supplier says that its latest quarterly Trade Pulse report has revealed that most tradesmen will only buy required quantities ahead of the deadline and will raise prices in the New Year in line with VAT increase.

The report, which examines its customers' confidence levels nationally, finds evidence that tradespeople are relaxed about the impact on business prospects of the forthcoming VAT rise. 

Asked whether they intended to stock up prior to the VAT rise, 23% of tradesmen said that they would but 60% said that there was no urgency and that they would only purchase what they needed. 

As might have been expected though, 82% said that they would pass on any price increases in materials to customers after January 1st, with only 15% saying that they would absorb the impact of the increases.

I have to agree with John Mewett, marketing director at Screwfix, who feels that with four out of five tradespeople saying they feel confident that they will be able to pass on post-January 1st increases to customers, the VAT rise is seen as broadly neutral for business prospects amongst the trade.

In a buoyant market tradespeople would have taken advantage of lower raw material costs ahead of the January deadline.  The fact that most aren't is a signal that whilst trading is much better than it has been, tradespeople aren't prepared to go out on a limb and stockpile materials.

I'd love to hear what the manufacturers and suppliers of white goods and kitchen, bathroom and bedroom furniture feel about these results and whether you have a different story to tell...

 

Yours,

 

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Jan Hobbs

15th October 2010




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