Many goods are price marked for the UK market inclusive of VAT to comply with UK price marking legislation.
Different rates of UK VAT
Normally VAT is set at the standard rate of 20 per cent, however there are in fact 3 rates depending on the types of goods being sold. They are:
- standard rate: 20 %
- reduced rate: 5 %
- zero rate: 0 %
HM Revenue and Customs website
Discounting UK standard rate goods
Our Goods and Services Tax (GST) is significantly lower than the UK standard VAT rate.
A new provision in the regulations will allow you to display UK price marked goods then discount at the till or display the lower Jersey price on a shelf edge label.
This may encourage local retailers to discount UK prices rather than re-price goods, where any savings would be lost in the labour.
All of my goods are individually priced marked before they are imported into Jersey. What should I do?
Display the goods and inform customers by way of general notice in and around the store that the Jersey price is the UK displayed price less X% discount that will be applied at the till.
Some of my goods are individually priced marked before they are imported into Jersey but they are scattered throughout the store. What should I do?
Display the correct Jersey price on the shelf edge label in proximity to the goods. Remember the Jersey price must be inclusive of GST.
What should I do if I use a UK chain or franchise IT system linked to a product catalogue and prices?
Display UK prices and inform customers by way of general notice in and around the store that the Jersey price is the UK displayed price less X% discount that will be applied at the till. Remember that the overall discount must take into account the addition of GST.
What overall discount should I apply to remove 20% VAT from my UK price but allow for the 5% GST?
You should apply 12.5%. Here is an example of the maths:
You wish to discount an item priced at £19.99 which is inclusive of 20% standard rate UK VAT. Within the discount you want to allow for 5% GST.
£19.99 = base price + 20% VAT
Therefore the base price excluding UK VAT = (19.99 /120) x 100 = £16.66
GST on the base price of £16.66 at 5% = 16.99 x 0.05 = 83p
Therefore the Jersey price (inclusive of GST) = 16.66 + 0.83 = £17.49
The percentage discount from the UK price £19.99 to the Jersey price of £17.49
(19.99-17.49)/19.99 x 100/1 = 12.5%
I am not part of a UK chain or franchise but would like to display what I have established are UK prices, then discount by way of a general notice. Is this acceptable?
No. The regulations will be very specific on the circumstances within which you are allowed to display UK prices then discount. If you are not part of a UK chain or franchise you can't use this provision.
I am part of a UK franchise but we operate regional pricing. Can I indicate the Jersey price by combining UK prices with general discount notices around the store?
No. The other important criteria is that the UK chain or franchise must have a single identifiable UK price. If you have regional prices then you will not be able to use this provision.
Reducing burden on business
The amendment to the regulations will remove the burden on business so UK linked enterprises will not have to invest in a separate IT infrastructure to maintain a catalogue of Jersey prices, thus encouraging Jersey discounts.
For more information contact Trading Standards.
How Trading Standards can help (staying safe section)