V.A.T.

[Birchy]

What was the original percentage when VAT was introduced, and what rate changes have there been since?

[Hippy]

The original main rate was 15 per cent and more (I think 22.5 percent) for so called Luxury articles. These included chocolate and televisions. This upper rate was abolished soon after, and some other things removed from the main rate (children's clothes etc). The rate was increased to the present 17.5 per cent and some other things included. All food used to be zero rated, but then prepared food and stuff served hot was included.

It was originally supposed to be a tax on the INCREASE in value rendered to an article. (Please note, the value of a thing is not necessarily linked to its sale price). It is now effectively a Purchse Tax, and that was what it was supposed to replace.

If VAT is charged on the sale of second hand goods (just purchase from one person and sell to another) where is the addittion to the value? If you buy a thing for �100 and then later sell it for �85 because it is worn or has depreciated, there is no value added, but you still have to charge VAT if you are a VAT registered business.

[Pinotage]

The original rate was 8%. In the General Election campaign of 1979 Labour predicted that if Mrs Thatcher won she's double the VAT rate. Mrs Thatcher dismissed this and promised she would not double VAT. She kept her promise and rasied it to 15%. It was raised to 17.5% in 1991.

.

Of course, there are varying VAT rates - the VAT rates for food and childrens clothes is 0%, and the rate on domestic heating fuel has changed several times.

.

VAT is a requirement of the EU, and 1% of VAT goes to the EU.

.

In the UK it replaced a simple purchase tax - a tax levied at the final sale point to the end use. VAT instead is levied on every sale with everyone registered for VAT collecting VAT on behalf of the government for theitems they sell, and subtracting the amount of VAT they pay on the items they buy. Thus there's an immense amount of unnecessary bookeeping done.

[gazzawazza]

Hi, this is another one of my, "I may be wrong, but-" answers, but I'm sure when VAT was introduced it was only about 4%. I may be wrong of course...!