VAT

[foxyferret]

Hi there, not sure if posting in the right place but here goes. Can anyone tell me when VAT changed from being put on to so called luxury items and white goods only, to being added to everday things like food, cleaning materials, washing powder etc? Was there any announcement from the government at the time or did they just do it sneakily hoping no one would notice? Thanks for any info

[Panic Button]

There's no VAT on food, except luxury items.

[foxyferret]

ice cream, grapefruit juice, some biscuits have VAT on. I know that we don't need these to survive but they are not caviar and champagne. However, because we don't actually need them, then I suppose they are considered a luxury.

[Panic Button]

I don't think anything has changed though.

[Canary42]

All VAT changes have to be announced in advance, to give shopkeepers the opportunity to upgrade electronic tills etc.

The mucky media rarely fail to pick up on it.

[foxyferret]

It just seems to have passed me by. I do remember when the government first brought in VAT, everyone was a bit up in arms at the time but then we were assured that it was only going to be on so called "luxury goods" mainly electricals, TV's fridges etc. I must have missed the bit where it went on everyday items like bathroom cleaner spray and hand wash and I was just curious about when it happened and why there did not seem to be anyone putting forward any objections at time. (whenever that was, maybe I was out of the country!

[boxtops]

I remember when it started - ?1974 - we were trying to work out what good it would do for small businesses apart from a lot more form-filling.

[buildersmate]

The higher rate of VAT (on so-called luxury items) was removed about 30 years ago - yes, that long ago.
Food and children's clothes are two of a very few items that are zero-rated for VAT. VAT has always been applied to most of the items you mention that are domestic but non-food items.
The tinkering around the edges has related to whether some foodie-type items are zero-rated or not - things like biscuits, hot food from take-outs.

[foxyferret]

Thanks to panic button and canary42 for your comments, and to boxtops for supplying 1974. Nice to hear from Builders mate again, is it really that long ago? I did not realise it had always been there from the start on the items I mentioned so excuse my ignorance. I think it was only when I noticed asterisks on my Tesco bill that I thought what is this? When I looked at the bottom of the bill, I found that the marked items had VAT on them. Thnks BM for enlightening me. I promise to pay attention in class in the future.

[ABerrant]

VAT (a requirement for membership of the EEC) replaced Purchase Tax (a "temporary" tax introduced in 1940 to curb spending during WW2 and aimed primarily at luxuries) and Selective Employment Tax (introduced in 1966 to increase employers' labour costs for 'non-productive' staff).

VAT was introduced in April 1973 at a single Standard Rate of 10% but was decreased to 8% in July '74 and four months later acquired a second tier Higher Rate of 25%.
In 1976 the rates were set at SR 8% and HR 12.5%, along with the introduction of Zero Rate.

Geoffrey Howe consolidated VAT to the single SR of 15% in 1979 which lasted until Norman Lamont's 1991 "Poll Tax alleviator" raise to 17.5%.

Kenneth Clarke introduced the Reduced Rate of 8% in 1994, which Gordon Brown decreased to 5% in 1997.

Of course Mr. Brown also temporarily decreased SR to 15% for 2009 to counteract the debacle caused by the abolition of the 10p income tax rate.