Darling cuts VAT to 15%

Alistair Darling has slashed VAT from 17.5% to 15% in a bid to boost consumer spending.

In his annual Pre-Budget statement, the Chancellor confirmed that the radical cut would take effect from Monday 1 December 2008 and will be offset by higher duties on petrol, alcohol and tobacco.

The rate will remain at 15 % until 1 January 2010 when it will revert to 17.5%.

Zero-rated supplies, such as basic foodstuffs, children’s clothing and books; exempt supplies, such as education and health; and supplies subject to VAT at 5 %, such as domestic fuel and power are not affected by this change.

European law dictates that VAT can fall no lower than 15%.

To discuss how the changes may affect both you and your business, please contact us.