UK raises VAT 2.5% to 20% in 2011

The UK Chancellor, George Osborne, today announced an increase in the UK’s standard VAT rate from 17.5% to 20%.  The rise will come into effect on the 4th January 2011.  There will be no change to the reduce VAT rate.

At an emergency budget held by the new Conservative government introduce a number of fiscal and spending austerity measures.

The UK VAT had been temporarily reduced from 17.5% to 15% in 2009 by the last, Labour government.

The UK’s rise copies other similar consumption tax rises across Europe, including: Spain, Portugal, Greece, Hungary and Romania.