Call me weird, but I like doing my accounts.
I enjoy making spreadsheets do my bidding, and going through the paperwork. March however ended up in something of a surprise...
For a while now I have been aware that Hilltop Cloud was growing, it's one of the reasons I left Etsy this winter. I also knew that I was heading towards the point where registering for VAT was no longer an optional choice, but instead something I was legally obliged to do.
VAT is a sales tax calculated as a percentage on the price a customer pays for an item. The seller collects the VAT, and then passes it on to the UK government via HMRC. All customers in the UK, and the EU have to be charged VAT once a seller registers to collect the tax.
As a result, from 9th April 2015 Hilltop Cloud is now VAT registered.
Writing that sentence is somewhat scary, VAT registration is a sign that your business is something serious, and many small businesses don't survive the period after the registration, as their prices are now higher.
Understandably I'm rather keen to avoid that fate!
I have spent today eyeball deep in coding, spreadsheets and help pages.
I think the basics are now sorted, hence me making this announcement.
From now on all purchases made by customers in the UK, and the EU will be charged VAT.
If you live in a non-EU country (USA, Canada, Norway, Australia etc.) you will pay the VAT free price.
The online shop now display the different prices, so I hope that everyone will be able to clearly see what price they will pay.
The extra price that you pay in the EU is not a case of me bring greedy, and making more money. Every penny of that 20% will go to the government, it's used to pay for important things like hospitals, schools, libraries and all the things that are important in our daily lives.
I have to collect this tax. Not charging VAT would lead to me paying large fines, and general nasty stuff!
My basic pre-tax prices have all now been lowered, this is partly because I can claim back VAT that I have been charged on my supplies, but also because I’m taking a slight pay cut.
That mostly means that the prices you pay in the UK and EU haven’t risen by a huge amount in comparison to the price you paid yesterday.
For example, a braid from the Hiraeth collection was £8, it’s now £8.50
A braid of Superwash BFL/Ramie was £13, it’s now £14
The Camel/Seacell,/Faux Cashmere was £16, it’s now £16.50
If you’re not from the UK, or an EU country you will now pay less!
Some things have increased by more; Dad’s tools are particularly affected. I always passed on the majority of the price you paid, to him, I kept a small amount to cover the payment processing fees, and the packaging supplies, and paid myself a very small amount for the work photographing, listing, and packing the tool. As he’s not VAT registered I can’t reduce the price I pay him, so I have to pass on all of the VAT to the purchaser.
One other thing about prices, all my stock for Wonderwool has already been labelled and priced. I am not going to take off all the labels, print out fresh ones, and re-label the whole lot. For once my ultra-organisation has come back and bitten me in the bum! All prices charged at Wonderwool will include VAT, and be at the old price.
What about clubs I hear you say! Clubs are going to be the most affected by these changes. I have always tried to keep them affordable, and good value for money as a reward for trusting me with a surprise each month! As a result I can't eat up as much of the 20% as I have with the online shop.
This is the inclusive price for everyone, European prices end up being the same as all the other countries, the extra VAT in the EU is cancelled out by your cheaper postage compared to other international countries.
I know I only just set this up… to say altering prices after just one month is irritating to say the least. However, I have got to do it.
All members will now pay £15
I know it’s quite a price hike in the UK, but given postage is £3 you’re still getting a braid of hand dyed, gradient fibre for £12, which I think still offers good value.
You might have noticed that the Luxe club is missing off that list. For now I’m going to wind up that club, I’ve got a lot on over the next few months, and doing all the extra paperwork that goes with VAT registration will take me a while to sort out. I’m going to take the pressure off myself, and shorten the monthly to-do list slightly.
A few payments for the next round have already gone through, I’ll be refunding those shortly.
Club members, please watch your inboxes, I will be sending you emails letting you know what you need to do if you're happy to continue in clubs.