Beat the January VAT price hikes

MoneySavingExpert.com has just posted the following message with the title Beat the January VAT price hikes.

*VAT rises from 15% to 17.5% in New Year* *Act now to beat the price hikes* Value Added Tax (VAT) goes back up to 17.5% on 1 Jan, meaning prices across the UK will rise. A £10 DVD will cost £10.22 (or more if companies round up) and a £5,000 kitchen would cost £110 more. Here's a quick VAT rise beating Q&A... *Q. By how much will prices rise? *It isn't as simple as adding 2.5% to the price. To find the increase multiply the price by 0.022, that's just over 2p per pound. *Q. Does VAT apply to everything? *No, you don't pay it on a few items like food, books, kid's clothes & overseas travel/accommodation (but you may pay overseas tax). *Q. Is it when you pay or receive goods that counts? *The VAT rate's usually determined when you pay or a tax invoice is raised. So pay now but receive goods in 2010, and 15% is charged. Yet there are complications. You could pay the higher rate if a VAT receipt's raised now but you take over 6mths to pay; or you try to pay now to beat the deadline when there's no chance of it delivered for an age.

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