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 VAT holiday will end as the tax rate returns to 17.5% from 15%.
M&S chairman Stuart Rose 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 Guardian 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 **
Depending on your circumstances, however, it may be a good idea to speak with a solicitor who specialises in tax law. You can be matched with a solicitor 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.
VAT Rate Will Return To 17.5% From January 1, 2010 (FindLaw - August 25, 2009)
UK VAT Rate: Government Announces 15% Rate Will Extend Into 2010 (FindLaw - November 4, 2009)