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UK VAT rises ruled out ahead of elections

  • Apr 29, 2017 | Richard Asquith

UK VAT rises ruled out ahead of elections

Both the governing Conservatives and main opposition Labour party today ruled out future rises in VAT ahead of June’s election.

The UK has enjoyed a dwindling government deficit since the 10%+ of the financial crises, but still faces a challenge to balance the books.  The 2015 elections pledge of the Conservatives not to raise VAT, employee taxes or income taxes has left the current government restricted in its options to tackle the rump of the deficit.  So today's commitment on VAT is a surprise.

Alternatives to UK standard VAT rate rise:

  • Increase the reduced VAT rate of 5%
  • Removing goods from the 0% rate band
  • Raise Insurance Premium Tax from the current 12% to match VAT at 20%.
  • Remove VAT reliefs to businesses, e.g. the VAT exemption on financial services which would become possible only once the UK leaves the EU VAT regime on Brexit
  • Introduce more VAT-like taxes, including Sugary Drinks Tax,
  • Raise import customs and duties taxes
  • Reverse the cuts to Corporation Tax, currently due to drop to 17% next year
  • Increase employment (National Insurance Tax) paid by employers and employees
  • Introduce Land Value Taxes, much favored by economists as the most sensible growth-orientated tax type

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.