Where Are The UK Businesses Concentrating Their Spending Based On This Year’s VAT Rise?

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Where Are The UK Businesses Concentrating Their Spending Based On This Year’s VAT Rise?

business concentration

When most people think of taxes, they think of the amount of money deducted from their wages every month. However, most of the items we consume are also taxed. Apart from a few products like food and clothes for children, most products attract a value-added tax set by the government. In the UK, this tax is currently set at 20%.

This means that as a business owner when setting your prices, you need to either include this amount to your charges or bear the tax burden yourself. With the increase in the VAT, consumers have changed their spending habits, and this has also affected how businesses spend their revenue. Here are a few sectors where most stores are likely to concentrate their funds;

marketing and advertisement

Marketing and Advertising

With the hard economic times and inflation, a couple of businesses have already shut down, and others are headed in that direction. This has created a niche in some markets. Therefore, some companies may choose to invest in marketing to take advantage of the gap created. Additionally, since consumers seem to be spending less, business owners will be doing everything they can to attract new customers.



These days, most people are embracing online shopping for both goods and services. Therefore, most companies and business are investing in online marketing. This involves setting up websites and using social media to market their services and products.

To do this technology is needed, whether it means buying smartphones, new computers or upgrading your internet access. Therefore, this is another sector where business are bound to invest their money.

Wages and General Running Expenses

Wages and General Running Expenses

During tough economic times, it is normal for a business to lay off some of their employees. However, unless a store shuts down entirely, they will still need to pay wages and general expenses like rent, water and electricity bills. Therefore a significant portion of their revenue is going to go to these expenses.

In some cases, the amount paid in wages can be reduced. For example, by getting weaccountax online bookkeeping services for small businesses, instead of retaining an accountant.



Although there may be an increase in the VAT, there are some sectors like engineering and construction and information technology which are still thriving. Therefore, it will not be absurd if some of the businesses and companies dominating these sectors, seek to expand their operations. While expansion and growth require money when done well the money put in will generate more income for the company and expand its customer base.



As a business owner, you need to save for a rainy day and while this can be done by putting money in the bank, investing this money is also a viable option.

By choosing the right investment, entrepreneurs will be able to grow their funds, and this can be re-injected into the business, used for expansion or to set up another shop. This is also a wise move because even if the initial venture fails, you will still have a source of income.

It should be considered that although some business will thrive and others will fail, almost all markets will feel the impact of reduced consumer spending. This is because an increase in the VAT is mainly felt by the end uses, who are the consumers and customers in this case.

This, therefore, means that although some may stores and companies may change their spending habit, most will look for ways to lower their expenses to maximize their profits. This might be done using various methods, for example, retrenching some people, removing underperforming items and services from the market.

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