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Emergency Budget: VAT to rise to 20%

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Guy Anker
Guy Anker
Deputy Editor & Head of Operations
22 June 2010

VAT will rise from 17.5% to 20% in January, the Chancellor revealed this afternoon.

Items such as food and children's clothing will continue to be exempt from VAT.

The Government says the increase will raise £13.5 billion a year by2014/15. An item that currently costs £100 that is subject to VAT will cost £102.13 next year.

Some estimates have suggested the hike will cost households around £500 a year.

The tax is paid for by retailers on the majority of goods sold but is usually passed onto consumers.

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