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VAT Rate May Increase To 20% In 2010

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Yesterday, the Office for National Statistics (ONS) released provisional estimates of the public finances showing that in October 2009 the public sector had:

  • a current budget deficit of £7.7 billion;

  • net borrowing of £11.4 billion; &

  • at the end of October, net debt was £829.7 billion, equivalent to 59.2% of gross domestic product.

UK "skint as a country"

On 1st January, the UK's will end as the tax rate returns to 17.5% from 15%.

M&S chairman says we should expect another increase next year as the Government looks for ways to pay off the deficit.  "We are skint as a country," he said.  "The Treasury needs revenue so I would not rule it out ... this Government and the future Government have got to make some hard decisions about refilling the coffers".

Retailers, already squealing about the return to a 17.5% VAT rate, fear a further increase would kill off the recovery before it's begun. 

But the estimates a VAT increase to 20% would raise an additional £12 billion a year for the public purse.  And levying VAT on food - which is currently exempt - albeit at a lower rate of 5%, would bring in another £3.5 billion a year.

** Additional Information & Advice **

You can obtain further information about VAT and other tax rules on and website.

Depending on your circumstances, however, it may be a good idea to .  You can be for free via solicitor matching services, which can also help you to understand the best course of action for your situation and whether you are ready to hire a solicitor.

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