VAT Holiday Not Extended by UK Government

by Jessica MCILHINNEY on August 27, 2009

December 31, 2009 will mark the end of the VAT (value added tax) holiday in the United Kingdom.  The retail sector, who many believe has been the main beneficiary of the break in tax, was hoping the VAT holiday would be extended into the new year, but this doesn’t seem to be the case according to leader financial publications.  A skyrocketing United Kingdom government budget deficit was given as the primary reason for the end of the VAT holiday.

Government budget figures, which were released earlier this week, confirmed that £8 billion was borrowed by the government in the month of July alone, bad news from a month that is historically very strong in receipts.  This raised the overall deficit to staggering £175 billion, which was a shock to those who thought the United Kingdom economy was starting to show signs of a turnaround.  Unfortunately, many within the government are predicting this number could grow much larger over the coming months and that the recession may not be over just yet.

The government insists that investment in the public sector needs to continue; even after billions of pounds of UK taxpayer money has already been dumped into the floundering banking system.  The VAT holiday hoped to promote such investment, as consumers can save a little money on their purchases of goods and services like travel.

Thanks to Financial Advice UK for the information.  For the complete article, please visit their website.

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