Emergency Budget: Chancellor’s VAT rise “in line with Europe”, says Ernst & Young
Proposed rise to 20% “echoes the policies of many governments in Europe”
The chancellor today announced a rise in the standard rate of VAT from 17.5%
to 20% from 4 January 2011, a move that Big Four firm Ernst & Young said is
line with other European countries and OECD recommendations.
The firm said that while this is to be expected, there will be relief that
certain items will remain zero-rated. Audrey Fearing, VAT partner, comments:
“Today’s much-anticipated announcement that VAT is to increase from 17.5% to 20%
will raise approximately £13bn per year by the end of this Parliament and go
some way to reducing the UK’s deficit.
“This shift from income tax to VAT echoes the policies of many other
governments in Europe, as well as recommendations from the OECD.
“Many will be relieved that the Chancellor did not address the much-valued
list of favoured items such as food, children’s clothes and books.”