PBR 2008: VAT rate cut to 15%
As widely predicted before the Pre-Budget Report, the Chancellor confirmed that the standard rate of VAT is to be cut by 2.5% to 15% - the lowest level allowed under EU law - with effect from 1 December 2008 in a bid to get consumers spending again. The reduction will apply for 13 months, returning to 17.5% from 1 January 2010. The new VAT fraction will be 3/23.
Only standard-rated sales are affected. There are no changes to sales that are zero-rated or reduced-rated for VAT.