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09 Dec 2009
Chancellor Alistair Darling confirmed in today’s pre-Budget report that the VAT rate would return to 17.5% on 1 January 2010 as planned – a move that has “disappointed many in the retail sector”, according to KPMG.
The Chancellor said that he “cut VAT to 15% for a year to put over £11bn into the pockets of consumers and retailers” and added that he was not planning any other VAT changes.
Gary Harley, Head of Indirect Tax at KPMG, commented: “While the return to a VAT rate of 17.5% as of 1 January 2010 is not unexpected, it will still be a disappointment for many in the retail sector who hoped for an extension.”
Andrew Garbutt, retail director at PwC, added: “For retailers who haven't passed the VAT cut on, the reversion to 17.5% will be added pressure on margin. Overall the reversion will have a somewhat inflationary impact on prices for retailers and consumers.”
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