Uk Vat Tax Rates

Uk Vat Tax Rates

Uk Vat Tax Rates

On the 24th November, Gordon Brown released his emergency economic rescue package to help fight the recession that is deeply effecting the United Kingdom and much of the world. One of the major parts of this plan was a cut in Value Added Tax (VAT).

VAT is normally at a rate of 17.5% in the UK, and Brown's plan has been to reduce it by 2.5% to 15%. It may have been reduced by more, however under current European Union regulations, VAT cannot be lowered below 15%.

It is reported that this 2.5% cut will cost £2.5 billion every year. The cut is meant to stay in operation for thirteen months. It was the first time that the government has cut VAT. The tax cut is by far the biggest part of the rescue package. The tax cut came into force in December 2008.

Opposition Leaders Name the Tax Cut a "Faliure"

In an interview on Jeremy Vine's BBC Radio 2 programme, David Cameron, leader of the Conservative Party, said that the VAT cut, which was meant to boost consumer spending and aid the housing market had not worked. In the interview on 2nd January 2009, Mr Cameron stated "The VAT cut has been an unbelievable and expensive failure."

Cameron also announced that, according to the latest Retail Insight Report (RIR), that footfall in high-street shops has fallen 3.1% during the month of December 2008. Cameron also hightlighted the need to help small businesses who do not have access to affordable credit and repeated calls for a £50 billion national loan scheme to stop the 'credit crunch' from destroying thousands of small businesses.

On January 3rd, Nick Clegg, the leader of the political party the Liberal Democrats seconded David Cameron's concerns calling the government tax cut a "waste of money."