PBR 2009: VAT to return to 17.5 per cent
In his Pre-Budget speech, chancellor Alistair Darling confirmed that VAT will return to 17.5 per cent, as planned, on 1 January 2009.
The rate was cut to 15 per cent earlier this year to encourage consumer spending as the UK entered its worst recession since the Second World War.
However, some believe that the reversal could spark a collapse in new year retail sales and derail the UK’s economic recovery.
Jim Leaviss, head of retail fixed income at M&G, said, ‘The VAT reversal will not only cause a blip upwards in inflation rates – most of the CPI basket apart from food attracts the tax – but might also derail the recovery of the UK economy.’
Reports that the Conservatives will announce a further rise in the VAT rate to 20 per cent should they come to power will also serve to exacerbate the situation.

Advertisement
Latest news
UK adults waste £2 billion in inheritance tax 27 April 2010
UK taxpayers will waste nearly £2 billion this year due to poor inheritance tax (IHT) planning, according to the annual Tax Action report by unbiased.co.uk.
- Tax tips for pension investors 16 February 2010
- Ten tips to beat the tax man 14 January 2010
- PBR 2009: Lenders concerned by stamp duty decision 9 December 2009
Top Ten Life Funds
| Fund | Offer | 1y | 3y | 5y |
|---|---|---|---|---|
| UBS Life Structured Credit A | 94.15 | 174.5 | n/a | n/a |
| Skandia Finland FIM Russia | 11.29 | 60.6 | -2.7 | 48.5 |
| Skandia Finland Alfred Berg Ryssland | 0.86 | 49.5 | -18.0 | n/a |
| Skandia Finland BlackRock Gold & General | 2.57 | 45.6 | 41.3 | 150.3 |
| Zurich American Property AL G4 | 43.30 | 44.7 | 20.9 | 39.3 |
| Skandia Norway Alfred Berg Ryssland | 0.87 | 41.2 | -16.8 | n/a |
| Aviva Investec Global Gold S4 | 0.00 | 41.0 | n/a | n/a |
| Skandia Finland JPM New European | 2.07 | 40.7 | -13.2 | 44.6 |
| Skandia Finland First State Greater China Growth | 1.35 | 40.0 | n/a | n/a |
| Skandia Finland Neptune Russia & Greater Russia | 1.49 | 39.8 | n/a | n/a |
Tax planning in depth
WEBCHAT - Take tax action now - avoid paying too much tax! 9 March 2010
Perplexed by pensions? Confused by CGT? Stumped by self assessment? Billions of pounds of hard earned cash is wasted every year through unnecessary tax payments or failure to use tax breaks. But how do you ensure you are not paying more than you should?
- Write a Will Week: expert legal and financial advice 23 October 2009
- Tax needn’t be taxing 1 October 2009
- Effective IHT planning 2 March 2009
Guides
Using Business Property Relief
21 April 2009
Keiron Root looks at how business property relief can be used to mitigate inheritance tax
- Video: How to become more tax efficient 12 March 2009
- Where there’s a will... 26 November 2008
- Guide to inheritance tax 21 January 2008
Special Offers
- Annual report service
Free access to annual reports and other information
on selected companies



