10/02/2011

By John Voyez, VAT Director at Smith & Williamson

Much has been written recently about the rate of VAT (value added rate) going from 17.5% to 20% and, regrettably, some has been inaccurate. Here we set the record straight.

A surprising range of goods and services are not liable to VAT. For example, children’s clothing is largely free of VAT, as are most basic food items.

Similarly, train, bus and airplane fares are VAT-free, as are books, newspapers and magazines, ordinary postal services and entry to museums. Cremation or burial is also VAT exempt, so while you may not escape all taxes on death, it is at least VAT free!

So with the new 20% rate, it will not cost you a penny more in VAT at the weekend to jump on the bus to go to the supermarket where you can buy some clothes for the kids, and at the same time buy most of the weekly shop, including a copy of Sporting Life, before picking up some aspirins to ward off the headache should you take a trip to the bookies on the way home and lose your savings (accrued VAT free) on the 2:30 at Epsom.

You could even follow up on Sunday with a game of football at the local sports centre in the morning, not to mention a trip to a museum (because you feel you should do something educational at the weekend), before finally falling asleep in your VAT-free newly built home in front of your brand new 90” plasma 3D HD TV screen you have just bought — which unfortunately will have cost you 2.5% more in VAT. But, if you need to stave off a craving for a cigarette, at least an anti-smoking patch won’t cost you a penny more than it did.

Finally, just for the record, we are still below the average standard rate of VAT in the EU which is now running at 20.7%. Indeed, you would be paying an eye-watering 25% VAT in Denmark, Sweden or Hungary, and 23% in Finland, Greece, Portugal or Poland.

For help with any aspect of VAT, call John Voyez on 020 7131 4285 or email
john.voyez@smith.williamson.co.uk


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