Discussion | VAT Added By UK Government

General Discussion
1

Hi

The UK government has decided to throw 20% VAT onto the Topaz subscription. As a pensioner on fixed income this makes it unaffordable for me, so I will probably have to finish when the current subscription comes to an end. It’s disappointing as I appreciate what Topaz Photo has done for my photographs, and I have been with Topaz for a while now, but I won’t be in a position to afford the new 20% higher rate. I blame the UK government for taxing businesses and consumers to death. Even when the government changes, as it will, whatever party the new government is, they will not change it - they never remove a tax. I will be sorry to lose one of my favourite programs.

Thank you

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2

Hi Stuart.

How did you find out about this has your Monthly or Annual Subscription just renewed or directly from HRMC

Thanks

3

Email from Topaz Labs Team I am in exactly the same situation as Stuart and feel the same about it as he does.

We’re making a change to how your subscription is billed.

Starting on or after July 5th, 2026, Topaz Labs will begin collecting Value Added Tax (VAT) on subscriptions for customers in the United Kingdom, as required by UK tax regulations.

VAT will be added at the standard UK rate of 20%, so your new subscription price will be your current plan price plus 20% — though your exact amount may vary slightly depending on your account. You can check your current plan price here Note that your price there will update once the change is applied to your account.

For questions or if your organization qualifies for a VAT exemption, reach out to us at topazlabs.com and we’ll take care of it.

The Topaz Labs Team

4

I have removed this reply incase it causes confusion within the community

5

This isn’t something to blame the Government for in this case. Subscription services such as this have always been subject to VAT; I suspect that someone with Topaz has just realised that they’ve been getting it wrong until now and is rapidly trying to ‘fix’ it by increasing prices to compensate - as if HMRC has picked this up, they’ll have deemed the price that we paid to be VAT-inclusive (which I expect we all assumed - I certainly did) and will be seeking an appropriate % from Topaz.

The same should be the case in the EU, but I’m not sure how they’ve been treating that so far.

They’re probably in breach of the promise not to increase prices for pre-subscription customers, but good luck trying to argue that.

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6

Hi Rob.

Yes thank you that sounds like it could be correct

7

I’ve been billed in USD, with the conversion applied by my card company - I’d expect that to continue.

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8

To comply with UK tax laws (HMRC regulations regarding “Electronically Supplied Services”), overseas companies selling digital goods to UK consumers are legally required to collect and remit the 20% UK VAT

The only exceptions are Books, e-books and digital journals get tax breaks which strictly applies to reading materials it has never extended to software utilities or creative tools.

Therefore Rob is Correct an error has been made and it should have been added in the past.

9

Especially in the case of digital products, enforcement of the rules in foreign territories has probably been a stumbling block for HMRC in the past. A smaller company would probably slip by unnoticed.

The increasing revenues from global B2B transactions (and possible IPO) have probably forced the need for compliance.

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10

Some of us signed up on the basis that we’d be locking in the price of $163 per year as long as we keep our subscriptions active. If Topaz have made a mistake with taxes then I suggest that they accept responsibility for their mistake and sort it out without scamming people by increasing the price that was explicitly advertised as never increasing (as set out in their email):

Upgrade to the full Topaz Studio and lock in a low price for life. For only $163, you get all desktop and cloud apps to make your images and videos even better. Check out everything you get below. $163/yr for life

If they need to start collecting VAT for regulatory reasons then the solution is simple. For the Founders (to whom they promised a fixed price) they can lower the cost of the subscription to $135.83 and then add the VAT to that, so it still works out at $163.

Otherwise they are using dishonest and misleading pricing practices, which will just replace their tax problems with different regulatory problems in the UK.

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11

Yep, this is what I was alluding to in my previous comment - and is how a contract would be taken to be construed in the absence of a specific comment that the price is “plus VAT”.

They can, however, simply cancel subscriptions instead of honouring the quoted price, and there’s not much that we could do in that instance.

12

HMRC get the 20% VAT the money Topaz receive is still the same $163 their not benefiting in anyway

Besides, It’s approximately another £25 on top of the annual Subscription which is still considerably less than the regular Annual Subscription and I believe other countries like Australia and the EU already have their Local version VAT added.

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13

I do understand what you’re saying. I just think that, while mistakes happen, it’s their mistake not ours this time and the right thing for them to do would be to absorb the extra cost relating to the finite number of people affected (specifically subscribers based in the UK, who already owned a Topaz product before Studio came out, and signed up under this offer, and who are still active).

After all, we agreed to pay $163 per year with the understanding that this covered all taxes and fees, as is standard for how prices are advertised in the UK. We didn’t agree to pay ‘whatever was needed to ensure that Topaz would receive $163 per year’. By that logic they could adjust the price for all sorts of other reasons e.g. if their merchant bank increased the cost to them for processing card transactions. In that case I don’t think it’d be reasonable to pass that on to the customers who were promised a specific annual price for life.

Personally, I don’t use the software often enough for it to be worth an extra £25 per year. I probably don’t even use it often enough for it to be worth $163, to be completely honest, but after a lot of thinking I had decided that it would be nice to have access to for that price. It really was a lot of thinking and if it had been more than that I wouldn’t have signed up.

14

You have some good and relevant points therefore, may I suggest sending your excellent reply though email directly to Topaz

16

Hi all!

To clarify, the recent change is related to VAT collection requirements, not an increase in the subscription price itself.

Historically, VAT was not being collected on some subscriptions where it should have been. As part of bringing our billing into compliance, applicable VAT is now being collected and remitted to the relevant tax authorities.

The VAT portion is not retained by Topaz; it is a tax that is passed through to the government. The underlying subscription price for Founders members has not changed.

I understand that this may still result in a higher total charge for some customers than they previously paid, and I completely understand why that is frustrating. However, this change was made to ensure that taxes are handled correctly and consistently going forward.

If anyone here has a registered VAT ID, please contact support to ensure that your account is correctly configured.

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17

In addition, to Ida’s excellent information you can also, Add or Update your VAT ID directly within your Account under the Billing & Other Details section which includes quick links to manage billing, VAT, and other account details.

Hope this helps

2 Likes
18

Thanks for taking the time to clarify this.

This is not acceptable given that the total annual charge was guaranteed at the time of signing up and, at least in the UK, VAT is included in the final price and not added on at the time of payment.

I’m confident that it was reasonable to interpret ‘$163/yr as long as your subscription is active’ as not having to pay a higher price at renewal for any reason, and it was a strong incentive for signing up since it was a time-limited offer to lock in the price.

As a customer there’s no other way to see this than “we’re increasing your subscription price by 20% when we specifically used the fact it was fixed as an incentive to sign up”. The reason for the increase isn’t relevant, even less so because it is presented as rectifying an error that was made by Topaz and not by the customer.

I’ll get in touch by email as suggested by AND-E above.

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19

Hi everyone,

​I wanted to share my recent experience regarding the email many UK subscribers received about the sudden addition of 20% UK VAT to existing active plans. If you are on an annual commitment plan billed monthly and are being told you have to pay an “early termination fee” to cancel because of this price hike, you need to know your rights under UK consumer law.

​The Situation

​I signed up for a 12-month contract before Christmas at a specific, discounted monthly rate. Halfway through the contract, Topaz sent an email stating they would begin charging 20% UK VAT starting next month.

​When I contacted support to cancel—because I do not agree to a price increase midterm—I was told that because it is a “regulatory tax change,” it “does not change the subscription price or the underlying agreement terms.” They then offered an “early termination link” to cancel, which demanded a $32.00 fee + $6.40 VAT (totaling $38.40) to close the account.

​The Legal Side (UK Consumer Rights)

​While Topaz is entirely correct that they must comply with HMRC regulations to collect UK VAT, their method of passing this cost onto existing, fixed-term retail consumers midterm is legally flawed under UK law:
​The Consumer Rights Act 2015: For a B2C (Business-to-Consumer) transaction in the UK, the price quoted to a consumer must be the total gross out-of-pocket cost.

​Material Change of Contract: If you are locked into a fixed 12-month commitment, the total amount leaving your bank account cannot be unilaterally increased midterm without your explicit consent. It doesn’t matter if the extra 20% is going to Topaz or to a tax authority—the fundamental financial terms you shook hands on have changed to your detriment.

​Right to Terminate Without Penalty: Because the contract terms are being altered midterm, a consumer has the legal right to reject the new terms and walk away cleanly. Charging an “early termination fee” to exit a contract that the vendor is altering is a penalty, which is completely unenforceable under UK consumer protections.

​How Topaz Should Have Handled This

​To maintain good customer relations and respect consumer laws, Topaz should have adopted standard corporate practices for tax transitions:

​Grandfathering: They should have absorbed the 20% VAT hit internally for the remaining months of any active, fixed-term contracts, and applied the VAT only upon the user’s next annual renewal.

​No-Penalty Opt-Out: Alternatively, they should have notified users of the mandatory tax change and provided a clear, zero-cost option to cancel the subscription immediately if they did not wish to accept the new rate.

​What You Can Do

​If you are facing the same $38.40 termination demand just to stop a midterm price hike, you do not have to pay it:
​Reply Firmly to Support: Advise them that under the UK Consumer Rights Act 2015, any midterm increase to your total monthly out-of-pocket cost is a material change to your fixed agreement, giving you the right to terminate early without penalty.

​Protect Your Account: Log into your Topaz account portal and remove your saved payment methods (or cancel the continuous payment authority/billing agreement directly within PayPal or your banking app).
​I hope this helps anyone else trying to navigate this change!

Topaz have handled this badly, I won’t be using them again.

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20

Hi.

Here’s a brief explanation of the information as I understand it for anyone still unsure about what the new Tax changes mean for people in the UK.

Annual Subscription:

If you have an Annual Subscription you won’t start paying the 20% VAT until your Renewal due date for example if your Renewal date falls before July 5th then you wouldn’t be paying VAT for another year.

Because, Since you paid a single lump sum, the Financial Transaction is complete. If your Annual Renewal date happened to be July 4th, you would Renew at the Old Price, and you wouldn’t see a penny of VAT until the following year.

However, if your Renewal date falls after July 5th then yes you will pay VAT.

Because it falls after July 5th, your upcoming Renewal Bill will have that 20% VAT added.

Monthly Subscriptions:

You have a choice, either after July 5th continue paying with added VAT or simply walkaway.

For example; with the regular Month to Month Plan, there is no Long Term Contract. Topaz has the right to change the price for the next month, and you have the equal right to say No Thanks and simply cancel your Subscription instantly before July 5th

Alternatively, if you like using Topaz Products then you could if wanted and only if you can afford it Cancel your current Monthly Subscription and get an Annual Subscription for a year and avoid that extra 20% VAT for another year.

Because, switching to an Upfront Annual Subscription right now before July 5th is a perfectly clever way to Lock in another 12 months at the Current 20%VAT Free Subscription Price.

Annual Billed Monthly:

You are the worst off because, you have commited for the full year but, only pay on a Month to Month basics therefore, after July 5th you will start paying the 20%VAT after that date.

On account of, you are locked into a 12 Month Contract, but your Bank Card is Charged Every Month.

Starting July 5th, Topaz intends to automatically inflate those monthly payments by 20%.

However, this is effectively a price increase on top of the Contract you signed up for therefore, under UK Law you should have the right to simply walkaway without incurring any penalties.

Under the UK Consumer Rights Act 2015, this is a material breach of the financial terms you originally agreed to.

You should be Legally Entitled to reject the new pricing and walk away cleanly without paying a single penny in early termination fees.

For more in-depth information than please read the two post below

Hope this helps

21

My goodness! Please email support and ask for Ida-- we most certainly will NOT charge you a cancellation fee if you are canceling due to VAT inclusion.

Did you mention that you are canceling based on this change?