UK shops respond to cut in VAT

Some comfort for cash-strapped cyclists

Several British bike shops have dropped their prices after VAT was cut from 17.5 percent to 15 percent this week.

Stif is offering five percent off all items, with the exception of bikes and frames where customers will pay 2.5 percent less.

The Evans Cycles chain has announced a five percent reduction in the price of all non-sale cycle clothing, parts and accessories. Bosses have also reduced the cost of all bikes by 2.5 percent.

The move follows online retailer Wiggle’s announcement last week that it would be passing on the 2.5 percent saving to customers.

Ian Phillips, general manager at Stif, said the store's offer would run until the end of December. Evans Cycles’ managing director, Mike Rice, said, “Cycling is taking the nation by storm, beating fuel and transport costs and making the nation healthier. We’re hoping our new price reductions will make cycling even more affordable than ever and encourage more bums on saddles.”

Many shops have held off dropping their prices because it would mean changing price tags and accounting systems at a time when business is tough and they need as many staff as possible on the tills in the run-up to Christmas. Others say their prices are already as low as possible.

Michael Cowan, from online retailer Chain Reaction Cycles, told BikeRadar, "At CRC we constantly monitor and amend our prices to pass on any savings we can to our customers. The new VAT rate gives us even more scope to price aggressively on an ongoing basis."

Chancellor Alistair Darling announced the VAT reduction in his Pre-Budget Report. The British Government hopes the move, which will last for 13 months, will help stimulate the economy in the wake of the credit crunch.

Steve Mills, from Wiggle, told BikeRadar: "We were chuffed the Chancellor announced the VAT cuts to help the British public just in time for Christmas and were even more pleased that we were able to pull out all the stops and pass the savings on to our customers instantly. The 15 percent VAT was announced last Monday at 3pm.  We had amended all prices live on the site to reflect this by 16.30pm  on the same day. We had lots of great feedback."

Now could be a good time to buy a bike, given the drop in tax and bleak economic forecasts of fluctuating exchange rates and increases in the price of raw materials. But prices have already begun to rise and many 2009 bikes are more expensive than their 2008 counterparts.

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