News

2011-01-11 : VAT rise increases pressure on businesses

The VAT increase from 17.5% to 20% took place on Tuesday 4^th January.

After a tough time in 2010, businesses had hoped to begin to see recovery in the busy shopping period in the run up to Christmas. Unfortunately, heavy snowfall and severe weather affected this time and prevented many people making purchases before the VAT increase as retailers had hoped.

The British Retail Consortium (BRC) says that the rise could have an effect on the January Sales. Businesses could feel the squeeze from a decline in sales and combined with the affect of the rise in business rates, many firms could struggle during 2011.

Landlords are also expected to feel the pressure from the VAT increase. Various brewers have written to advise that from February this year, many wholesale prices for their products will increase.

The increase in fuel duty and the recent rise in petrol prices have brought a double whammy to the transport sector. Independent garage owners may see their profit margins fall as, unable to match the volume sold by larger retailers, they cannot afford to sell at a loss to gain new trade.

However, some businesses continue to be optimistic, as many retailers did not see an increase in business when the VAT was reduced to 15% in early 2010.

With so many problems facing varied industries for 2011, it is essential that costs are reduced where possible. Ruddle Merz clients have benefitted from their no hassle, free business rate review and have saved many thousands of pounds. Contact us on 0800 883 0353 or email enquiries@ruddlemerz.co.uk today to see what can be done for your business.