Sunak considers cutting VAT on household energy bills

sparky0138

Rishi Sunak could slash VAT on household energy bills in the budget to ease the cost of living crisis, it was claimed today.

The Chancellor is believed to be considering reducing the 5 per cent rate even though he has very little room for manoeuvre in the financial package on October 27.

Sunak considers cutting VAT on household energy bills

Gerry1

The massive increase in domestic energy prices automatically results in a massive windfall VAT boost for the government, so they could easily cut the VAT and still collect more tax than before the crisis.

It's definitely a no brainer.

[Deleted User]

Makes me 50 notes a year better off where as I am paying 400 a year more for the increase?
(edit assuming a drop to 1%)

Need to check me workings out.

Farway

Seeing as it was the Tories who put VAT on energy in the first place and EU rules that then prevented labour reducing it back to zero, 5% being minimum allowed once imposed I suppose it would be a belated "sorry"

There is the plus of squillions more VAT being raked in by recent increase in petrol prices so there would be room for shuffling the deckchairs

Castle

Farway said:

Seeing as it was the Tories who put VAT on energy in the first place and EU rules that then prevented labour reducing it back to zero, 5% being minimum allowed once imposed I suppose it would be a belated "sorry"

There is the plus of squillions more VAT being raked in by recent increase in petrol prices so there would be room for shuffling the deckchairs

Indeed, it was originally introduced in 1994 at 8% and it should have gone up to 17.5% in 1995, but the budget proposal was defeated; in 1997 Labour bought it down to 5%.

savefortherain

They'll probably increase VAT for the poor to compensate

t0rt0ise

They are going to put a sales tax on internet purchases so that will make up for it.

wittynamegoeshere

Does this affect the cap or not?  Could it be that we could all still pay the same but the poor starving energy companies get 5% extra money?

Grizzlebeard

wittynamegoeshere said:

Does this affect the cap or not?  Could it be that we could all still pay the same but the poor starving energy companies get 5% extra money?

No, and although I have sympathy for your sentiment, the energy companies are starving too at the moment.
The leaner ones have already starved to death.

However, when all this has all settled down no doubt the surviving fatter ones will find an opportunity to grow even more obese.

MWT

wittynamegoeshere said:

Does this affect the cap or not?  Could it be that we could all still pay the same but the poor starving energy companies get 5% extra money?

No, the cap calculations are stated ex-VAT and the examples they provide only include VAT for convenience, so a supplier could not raise their ex-VAT pricing as a result of a VAT change if they were already at the cap.