Weather VAT storm by saving

New Year VAT hikes will not just hit shop cash registers, customers will also pick up the cost. Sophie Hazan reports.

CHRISTMAS will land hard-pressed families with an average 283 tax bill, it has been claimed.

Families might be saving for seasonal festivities this month, but they will be stung by VAT on gifts, excise duty on alcohol and fuel tax on trips to visit friends in the New Year, warned the TaxPayers' Alliance.

And with VAT set to increase from 17.5 per cent to 20 per cent on January 4, the cost of living could get worse.

Consumer groups are now warning people to not overspend at Christmas so they are not caught out when the bills roll in in the New Year.

Mike Throssell, of Leeds Citizens Advice Bureau, has warned that the increases could be seen as early as the January sales.

He said: "Anyone who does their window shopping before Christmas and hopes to pick up a bargain in the January sales needs to be careful or they could get an unpleasant New Year surprise.

"The Government have timed to increase in VAT to hit the shops on the first Saturday after Christmas.

"Value Added Tax or VAT is stealthily included in the price of a huge range of essential consumer items and there is no way most of us can avoid paying it.

"The shops aren't required to separately identify it in the price tag, so it will mean many prices will simply shoot up 2.5 per cent on January 1.

"Thankfully, medical costs and fuel bills are either exempt or at reduced VAT and won't be affected by the increase."

Consumerwatch spoke to Leeds shopkeepers to see if they would be passing on the cost of goods to their customers.

Steve Banks, co-owner of independent design and clothes shop Paper Scissor Stone on New York Street, said that it would be very difficult for his business to absorb the extra VAT on goods.

He said: "Some retailers will be passing the cost on to customers, absolutely.

"Big companies will be able to absorb that extra tax, but small companies won't."

Asked about the timing of the tax rise, Steve added: "It's isn't that bad.

"The good thing about January is that our new stock comes in February and March, so we will have already paid the VAT (on current stock].

"It just means that everything's going to go up by 10 or 15 depending on its price, which is a nightmare for everyone."

Craig Christon, owner of Rebel Pin Up hair salon, which opened in Leeds city centre just six months ago, added: "The Government's a joke really.

"There is no money out there, which is the difficulty.

"I have had businesses in Leeds for the last 20 years and it's harder now then ever, especially with the increase in VAT.

"We are not happy."

But not everyone will put up their prices.

Charles Lewis, a hair salon on Kirkstall Road in Burley, has promised its customers to keep its prices the same despite VAT increases.

Citizens Advice Bureau chief executive Gillian Guy said: "Christmas is a time of giving and it's all too easy to overspend. There are enticing offers and pressures to buy and it can be tempting to ignore how much you are spending, but this may lead to problems in the New Year.

"Planning, budgeting and organisation are key to avoid getting into debt at Christmas and beyond."

Get advice at your local Citizens Advice Bureau or visit www.adviceguide.org.uk.

Keep the loan sharks at bay this festive season

stop loan sharks causing misery and fear this Christmas, urges a new online campaign.

Don't Get Sharked, a Trading Standards scheme, aims to help victims of illegal money lenders and encourage them to stop criminals making money out of innocent families.

Currently an estimated 310,000 households in the UK are in debt to illegal lenders, according to research for Trading Standards.

One fifth of victims said that they borrowed to pay for Christmas. Illegal money lending teams are now warning people to avoid loan sharks at all costs.

Chris Smyth, chief executive of Leeds City Credit Union, said: "Tackling illegal money lenders and other forms of high cost lenders is vital.

"So often these lenders blight people's lives and pray on them at times like Christmas.

"The credit union offers a real alternative to these sharks by being able to offer credit at much lower cost."

Tony Quigley, head of the money-lending unit in the North, said: "Illegal lenders prey on some of the most vulnerable people within our communities, charging exorbitant rates of interest and trapping people in a spiral of debt.

"When people cannot pay, they can resort to the most horrendous methods to enforce their debts.

"We will not tolerate people living in misery and fear because of these greedy and callous illegal lenders.

"We urge anyone who is aware of illegal lenders operating to come forward and speak to us in confidence."

Illegal money lending teams have helped more than 16,000 victims who have fallen prey to illegal lenders.

Around 2.5 million in cash has been confiscated, with around 25 million of illegal debt written off.

To report a loan shark anonymously call local rate number 0300 555 2222.

Follow the illegal money lending teams on Twitter at www.twitter.com/loansharknews.

Energy firms rated in league tables

A new league table of complaints has been created to help consumers decide which energy supplier will give them the best customer service.

The 'Big Six' gas and electricity companies have been ranked by Consumer Focus using a star rating based on how many complaints they received in relation to their market share as well as the severity of the complaint.

Southern and Scottish Energy came out best with four stars out of a possible five – with Scottish Power, EDF and npower coming joint bottom with just two stars.

The new ratings are based on the most comprehensive energy complaints data available at Consumer Direct, Consumer Focus and the Energy Ombudsman.

The results will be published every quarter.

The Big Six energy suppliers – which make up more than 99 per cent of the domestic market – received around 4.6 million customer complaints in the last financial year.

Mike O'Connor, chief executive at Consumer Focus, said: "We know energy companies are rooted at the bottom of our consumer trust survey.

"They have got a lot to do to win the respect of their customers and getting a firm grip on customer service and complaint handling should be a priority in the boardroom of these companies.

"They should all be aiming to be a five star service.

"Scottish and Southern Energy are the clear leaders, but the difference between energy suppliers is stark when they all sell an identical commodity under the same market rules."

Consumer Focus energy complaints figures can be found at www.consumerfocus.org.uk.

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