Emergency Budget: VAT to rise

John_Pierpoint

6500 = 1.175
so 100% = 6500 / 1.175 = 5531.91
so 120% = 5531.91 * 1.20 = 6638.30

anniemo60

No one has mentioned the VAT we pay on our domestic fuel.

If this is going up to 20% [currently 5%] it will become very expensive to keep warm in winter. It's bad enough now!

I am really worried by this as we can hardly afford fuel in the winter as it is.

winston_1

The 5% lower rate on gas and electricity is increasing to 6%.

When VAT was first introduced in 1973 it was at 10%. Now VAT is self inflationary, i.e. as prices rise the VAT take rises with it. So in theory it should never be necessary to change the rate. However it seems to have risen in most EU countries. I don't know what other countries started at but when I visited Germany some years ago it was 15%, now it's 19%. Likewise last time I was in Norway it was 23%, now it's 25%. Australia introduced VAT, called GST there, a few years ago at 10%. Anyone know if that has gone up yet? This constant increasing is only due to governments incompetence. If a private company tried to put up it's prices when it got it wrong the competition would soon put them out of business. Trouble is the various governments have no competion.

JasonLVC

winston_1 wrote: »

The 5% lower rate on gas and electricity is increasing to 6%.

When VAT was first introduced in 1973 it was at 10%. Now VAT is self inflationary, i.e. as prices rise the VAT take rises with it. So in theory it should never be necessary to change the rate. However it seems to have risen in most EU countries. I don't know what other countries started at but when I visited Germany some years ago it was 15%, now it's 19%. Likewise last time I was in Norway it was 23%, now it's 25%. Australia introduced VAT, called GST there, a few years ago at 10%. Anyone know if that has gone up yet? This constant increasing is only due to governments incompetence. If a private company tried to put up it's prices when it got it wrong the competition would soon put them out of business. Trouble is the various governments have no competion.

No, the reduced rate of VAT is still 5% and is NOT changing.

The confusion comes from Osbourne's speech, he fumbled mid-sentence and so one statement merged with another, seperate statement.

Insurance Premium Tax (IPT) has two rates....5% and 17.5% ....so basically the same percentages as VAT. THESE IPT rates are going up to 6% and 20% so your household/car insurance will be 1% dearer from next year, but VAT for gas/electric will stay exactly as it is.

JasonLVC

anniemo60 wrote: »

No one has mentioned the VAT we pay on our domestic fuel.

If this is going up to 20% [currently 5%] it will become very expensive to keep warm in winter. It's bad enough now!

I am really worried by this as we can hardly afford fuel in the winter as it is.

Please don't worry - gas/electric are reduced rate of VAT supplies which is 5% and is not going up in this budget. The government cannot treat gas/electric as standard rated (20%) supplies as the EU law prohibits it....it'll always be reduced rated.

anniemo60

Thankyou very much, this is a great relief to me. Good news indeed. Annie

Stuartli

>>An item that currently costs £100 that is subject to VAT will cost £102.13 next year.>>

Surely it will be £117.50 plus the £2.13?

I don't recall too many complaining when VAT was cut for 13 months last year...:-)

anniecave

The poster meant £100 including VAT before (so that was actually 85.11 plus VAT at 14.89)
The vat goes up to £17.02 which added to the 85.11 makes a total of 102.12

liquidstool_2

hey all,

sounds a bit of a silly question really but does the vat rise hit heating fuel? ie, kerosene, coal etc?

thanks

adidas

Please correct me if I'm wrong, but won't a VAT increase on goods and services put up the cost of basic items (like food, childrens clothing) to be in line with other items that are VAT taxable? So the VAT increase will have some effect on pushing up all prices? I've not done any specific research on this topic but just wondered about peoples opinions.