VAT rate rises today to 20%
by Kay Murchie
The rate of VAT will today rise from 17.5% to 20% as the Government looks to raise billions of pounds in order to trim the UK’s budget deficit.
While many are prepared for the increase, retail sales are expected to be hit as consumers are expected to cut back on their spending over the coming months.
According to a report by the Centre for Retail Research and Kelkoo, the online shopping group, consumers will spend an average of £324 less this year as a result of the rise in the levy.
However, food, children’s clothing, newspapers and magazines are not subject to the tax so will be unaffected.
Meanwhile, the British Retail Consortium (BRC) said the retail sector will be hit but it is necessary “as part of the Government’s package to tackle the deficit.”
However, the BRC added that the rise may impact on the traditional busy January sales period.
The new rate of 20% brings the UK into line with other European countries.
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Tags: 20%, British Retail Consortium, budget deficit, consumers, cut back, Government, January, retail sales, rise, spending, today, VAT
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