
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.
Further reading/Key links
Cut costs: High Street Haggling, Cheap Online Shopping
Have your say
This is an open discussion but the comments do not represent the views of MSE. We want everyone to enjoy using our site but spam, bullying and offensive comments will not be tolerated. Posts may be deleted and repeat offenders blocked at our discretion. Please contact fbteam@moneysavingexpert.com if you wish to report any comments.