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PBR: VAT to return to 17.5%, delay to corporation tax increase

Chancellor Alistair Darling has confirmed that VAT will return to 17.5 per cent on January 1, 2010.

In his pre-Budget speech today, Darling said he has no further changes planned for VAT.

Last year the Chancellor dropped the VAT rate to 15 per cent for 12 months, in an attempt to ease the burden on consumers.

Darling also announced plans to defer an increase in corporation tax for smaller firms, claiming the decision will help around 850,000 businesses.

He said there will be no increase in 2010.

Kinleigh Folkard & Hayward financial services director John Phillips says the VAT cut will not help home buyers looking for finance.

He says: “Whilst the return to a 17.5 per cent VAT level from January 1 will push more money into Government coffers, it is not likely to help house buyers looking to access a mortgage.  

“People will have less money free to put towards saving for a deposit, and combined with a continued difficulty in obtaining lending, will not really help those looking to purchase property in 2010.”


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