Wedding VAT Bliss

Unless you have been on the moon, you will have heard of the VAT rate cut from 17.5% to 15% that takes effect from next Monday.

This filled me with interest, not only because I am a VAT Consultant (so it is my job to be interested) but also because I am getting married next year and I, along with all us spouses to be, have forked out sizeable deposits for items ranging from DJ's to dove releases and venues to vicars.

So where do we stand when it comes to the VAT rate cut? Will it mean we can now afford Veuve Cliquot for the toast instead of cheap Cava from your Dad's booze run to Calais?

Well the answer is yes, no or maybe (the same answer to any VAT question you care to ask!).

By way of an example, I have paid, just last week, a £450 deposit for my wedding dress. I have scoured the terms and conditions of sale but there is no mention of VAT.

I have agreed a price of £900 in total for the dress which is clearly highlighted on my receipt as being the total amount payable.

I therefore have no doubt that the wedding dress shop will simply increase the dress's net price (the price without VAT) so that the VAT cut is then entirely in their favour. This is perhaps best explained using an example as follows:-

Wedding dress price      £900.00            Wedding dress price       £900.00

VAT (at 17.5% rate)       £134.04             VAT (at 15% rate)          £117.39

Net price                       £765.96            Net price                       £782.61

As you can see, the wedding dress supplier has then increased her 'profit' by £16.65 (£134.04 - £117.39) and I, the poor bride, is left paying the originally quoted £900 for the 'dress of my dreams'.

So, can I do anything about this? Well the answer is again yes, no or maybe. In the example above, there is not a lot that I can do other than to try and renegotiate the price of the dress and appeal to the shop owner's better nature. Legally, the wedding dress shop does not have to pass the VAT saving of £16.65 on to me or you, the consumers.

This is because an all inclusive amount has already been agreed for the item.

This is the same for a hotel deposit. We have paid a £1,000 deposit. If the hotel followed the rules correctly they will already have accounted for VAT on this at 17.5%. However, this does not prevent the hotel from accounting for VAT at 15% at the time of your wedding. Again, you should read the terms and conditions of your contract and use your bartering skills. 

All in all then, the VAT rate cut for us spouses to be does not herald any favours (be it sugared almonds or seed packets).

Contributed by Simone Hurst at BTG Tax, www.btg-tax.com