You’ll certainly feel the pinch If a new government increases VAT, but not from these VAT-free goods and services.
Now that Britain is shouldering a colossal £178 billion deficit, rumours abound that the next government – Labour, Tory, or even a Lib Dem-involved coalition – will have to increase VAT to help lighten the burden of debt.
Following January’s reversion to 17.5% VAT, some quarters expect a further 1% rise to arrive later in the year, whilst others expect a 2.5% jump to 20% VAT – a move that would bring around £13 billion annually into the national coffer.
Although the Treasury needs to boost income if inroads are to be made towards balancing its books, a VAT increase won’t be welcomed by the public. With more petrol duty increases on the way, plus pay packets already threatened by increased national insurance contributions, consumers may be facing a prolonged spell of belt tightening.
VAT-Exempt or 5% VAT Goods and Services
But whatever happens to the VAT standard rate, the price of some things, in theory, should remain largely unaffected because they are either VAT-free or incur just 5% VAT. In practice, however, prices tend to increase across the board to cover such things as increased delivery costs, but the following items shouldn’t rise to the same degree. Here’s a rundown of VAT-free or 5% VAT goods and services, and a complete list can be found .
Note that the following list refers to food bought in shops, and not in restaurants, cafes, stalls etc.
Raw meat and fish; vegetables; fruit; cereals; nuts and pulses; culinary herbs; bread, rolls and pitta; biscuits (though not the nice kind that are topped or covered in chocolate); cakes; sauce; soup; vegetable oils, corn; sesame seed, sunflower seed, soya; canned and frozen food other than ice cream; salt; sweeteners; chilled or frozen ready meals; sandwiches (as a grocery item); wafers and cones; milk and flavoured milk drinks (including milk shakes); tea, cocoa, drinking chocolate and coffee (unless sold hot for consumption on the premises); and many more.
Vat-Free Everything Else
Physical education and sports activities; prescriptions; health services provided by registered doctors, dentists, opticians, pharmacists and other health professionals; equipment for blind, partially sighted or disabled people; cycle and motorbike helmets; protective boots and helmets for industrial use; donated goods bought from charity shops; burial or cremation costs; tolls for bridges, tunnels and roads operated by public authorities; printing (brochures, leaflets and pamphlets); postage stamps for the UK; books, magazines and newspapers; baby wear; children's clothes and footwear; education and training; betting and gaming; bingo; lottery; and last but not least - financial services like loans or credit, and insurance services such as car insurance or home cover.
5% VAT Goods and Services
Children's car seats and boosters; carrycots; domestic gas, electricity and water; nicotine patches and gum; home insulation installation; and mobility aids for the elderly.
Remember, follow the link to see a complete list of VAT-free or 5% VAT goods and services.
Finally, here’s one we can all get behind. Let’s breathe a collective sigh of relief because if you’re in the market to buy... an airship... then you’ll find there’s no VAT to pay. The queue begins right here.