A Value Added Tax (VAT) ‘loophole’ that allows British consumers to buy cheap DVDs, CDs, computer games and other goods from the Channel Islands is set to close, as Chancellor of the Exchequer George Osborne is expected to reform VAT rules in this month’s Budget.
Currently, retailers are allowed to import items valued at less than £18 from their non-EU branches and warehouses without having to pay VAT. This allows them to pass savings on to consumers, resulting in cheaper prices and stiff competition for customers.
Cheap DVD and CD sales to end?
This practice is used by big-name brands such as Amazon, Tesco, Asda and Sainsbury’s, and some retail experts have blamed it for the demise of high street record retailers such as Zavvi.
If the Chancellor decides to change the rules on non-EU imports, the price of new DVDs and CDs could increase by several pounds.
Experts predict the move might cost shoppers as much as £100m a year, collectively – but the decision is likely to be presented as a necessary part of the government’s deficit reduction plan, and may please high street retailers such as HMV who have struggled to keep their prices competitive with those of online retailers in recent years.
Ways to save on music and film
Even if the Budget sees the cheap DVD and CD ‘loophole’ closed, there are still ways you could cut the cost of entertainment.
Read our articles 9 ways to save on films, cinema and DVDs and 10 ways to save on CDs, MP3s and downloads for top money saving tips.
Elsewhere, you can keep abreast of the measures George Osborne announces in this month’s Budget by following the action live on the Which? Money Budget 2011 live blog. We’ll be watching out for all his important decisions and giving you the opportunity to ask our experts what they mean as we cover them – so don’t miss it.
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