|
VAT Rise Imminent According to New Report
Listed under: News
Published: Wednesday, February 17, 2010
Speculation that the rate of VAT could rise to as much as 20% following the general election this year is a near certainty, according to recent research from LexisNexis, one of the UK's leading information specialists.
The findings, which were found through analysing VAT trends over the past few decades and exploring the practices adopted in other European countries, predict that VAT is likely to rise by at least 2.5%, regardless of which party takes over – something it speculates will be announced in the first budget report following the election.
The increase, which will see the current VAT rate rise from 17.5% to 20%, will bring the UK closer to the European average, presently standing at around 20%.
At the moment, Luxembourg, Cyprus and Spain are the only European countries with lower rates than ours – currently at 15% (for the first two) and 16% respectively. However, a number of countries will be raising their VAT over the next few years, with Spain and Germany seeing their rates rise to 18% and 19%.
Commenting on the findings, Paul Stainforth, tax expert at LexisNexis, says, “Given the size of the deficit, and the trend to increase the rate of VAT in EU member states, it could be a big surprise to the markets if a rise in the UK’s standard rate of VAT is not announced in the first budget after the election, regardless of which party gets into power.”
The rise is likely to put a huge strain on independent retailers throughout the UK. Sue Fergus, co-owner of the craft store Crafters Cove in Wales, says, “It is such a pity that things have to change. We have only just adjusted our pricing to accommodate the VAT hike at the start of the year and most companies are still trying to adapt their business plans and budgets to that.
“Unfortunately, it is something we can do very little about and I guess we will just have to see how things pan out. However, it certainly is not ideal and it seems absolutely ludicrous to hit retailers with even more added costs just as things appear to be picking up,” she concludes.
How will the VAT rise affect your business this year? Email your thoughts to .(JavaScript must be enabled to view this email address)
The findings, which were found through analysing VAT trends over the past few decades and exploring the practices adopted in other European countries, predict that VAT is likely to rise by at least 2.5%, regardless of which party takes over – something it speculates will be announced in the first budget report following the election.
The increase, which will see the current VAT rate rise from 17.5% to 20%, will bring the UK closer to the European average, presently standing at around 20%.
At the moment, Luxembourg, Cyprus and Spain are the only European countries with lower rates than ours – currently at 15% (for the first two) and 16% respectively. However, a number of countries will be raising their VAT over the next few years, with Spain and Germany seeing their rates rise to 18% and 19%.
Commenting on the findings, Paul Stainforth, tax expert at LexisNexis, says, “Given the size of the deficit, and the trend to increase the rate of VAT in EU member states, it could be a big surprise to the markets if a rise in the UK’s standard rate of VAT is not announced in the first budget after the election, regardless of which party gets into power.”
The rise is likely to put a huge strain on independent retailers throughout the UK. Sue Fergus, co-owner of the craft store Crafters Cove in Wales, says, “It is such a pity that things have to change. We have only just adjusted our pricing to accommodate the VAT hike at the start of the year and most companies are still trying to adapt their business plans and budgets to that.
“Unfortunately, it is something we can do very little about and I guess we will just have to see how things pan out. However, it certainly is not ideal and it seems absolutely ludicrous to hit retailers with even more added costs just as things appear to be picking up,” she concludes.
How will the VAT rise affect your business this year? Email your thoughts to .(JavaScript must be enabled to view this email address)
