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Friday
May212010

Could a 19/100 VAT Rate Be on the Way?

Much of the news I have been reading of late has revolved around the potential result we will see in the General Election.  Small businesses and taxes have both come under scrutiny as the electorate have been looking at what each political party has in store for us if they should win an outright majority.

But many economists and other experts in the field have pointed to the fact that not one of the main parties has announced firm plans to keep VAT at the current rate of 17.5%.  This has been seen as a signal by many that whoever gains power after the 6th May, we can expect a rise in VAT to occur not long afterwards.

My thinking is that a rise to 19% could well be on the cards.  However if we have a hung parliament then the parties will need to come to an agreement on various policies, so we could see a rise in VAT coming later than it may do otherwise.

Of course we can only speculate at present as to whether a rise is likely, but all signs show that it would be one of the best ways to make the budget forecast easier to achieve.  With the country deeply in debt at the moment a rise would indeed be welcome by many and it would perhaps also be better than more unpopular rises in income tax.

If you have a business that would be affected by a rise in VAT, or indeed you want to know more about your current tax position with regard to any changes which could happen in the near future, contact us here at St Matthew.  We can provide you with the advice and support you need in all respects.

 



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