Warmer weather hotter prices
From Tuesday 4th January 2010 VAT will rise from 17.5% to 20%. Ed Miliband has announced to the BBC that this is the wrong time for a tax rise.
Who will this affect?
The rise in VAT will affect any VAT-registered business that purchases or sells goods or services that are currently subjected to the current standard rate of VAT.
What will not be affected by the VAT rise?
Most foodstuffs, children’s clothing and books will remain zero-rated. Reduced rates will remain on items such as fuel and power supplies and children’s car seats.
What is the aim of the VAT increase?
To help the UK’s current economy, tackle the deficit and raise £13bn.
Will spending increase?
The Labour leader Ed Miliband has said the average family will have to find an extra £7.50 “each and every week”, resulting in an extra £389 a year.
What is the prediction for 2011?
The BBC have predicted retail sales will fall by about £2.2 billion in the first four months of the year.
The VAT increase has been discussed continuously over the last few months by various political leaders and therefore the public planned ahead. Individuals spent the majority of their ‘Christmas spending money’ over the month of December and personally I have resisted the January sales. To help save money and spend wisely see a previous blog post offering advice on how to look fashionable and not spend a penny or how to provide high entertainment at low costs.
Rebecca's Rambles... 
Some things seem certain in life…. to be born, die and pay taxes!! The deficit has to be addressed and raising money through taxation is one solution. This will definately be a year for careful budgeting.
Reducing the deficit (roughly at £170bn for 2010) by £13bn is quite pathetic in my opinion. Tougher measures are needed to reduce the massive public sector that the UK now has, and the overspending of the previous government. Unfortunately, the UK is in a much worse position than many are aware of, as the actual UK debt is £1.1 TRILLION according to http://www.debtbombshell.com.
Shared amongst the working populace, this amounts to £35,000 per employed person.
Another interesting statistic on the site I link is that for every single person in the UK, if the national debt was shared equally, they would owe £15,000. That includes people too young to have voted for the very government that would’ve been spending THEIR money that they have to repay later in life, even though they didn’t get a say in the matter! Isn’t that called STEALING?
Not fair…!
Thank you for that link- very thought provoking indeed! I think the economy needs a drastic rethink and any changes made will not happen overnight. Instead of increasing VAT other actions need to be implemented: reducing loans, looking at wages and benefits .e.t.c. Increasing VAT by 2.5% shows government initiative but it does not add any reassurance or British morale that is for sure!
The big problem is – with few companies giving the employees pay rises this year, how is everyone going to survive with this increase!
Very true, have you experienced this in your own company? I think it emphasises hard times are (still) yet to come.
I have no problems with the tax rises, but then i dont think i am particularly affected by them so i feel badly for those who are. Personally, i know we need to recover financially and if this is their answer, i will take it. I have to say tho, i feel a small bout of humor evey time i sell someone cigarettes and they realise the price has gone up so much… no offence to all you smokers!