UK VAT Rate Chart History
VAT (Value Added Tax) was introduced to the UK in 1973 following the Finance Act of 1972. Since it’s induction, our UK VAT Rate Chart plots major rate changes over the years.
UK VAT Rate History
Below, are the primary changes in the standard VAT rate over the years.
- 1973: VAT introduced at a standard rate of 10%
- 1974: Standard rate reduced to 8%
- 1979: Standard rate increased to 15%
- 1991: Standard rate increased to 17.5%
- 2008: Standard rate temporarily reduced to 15% (from December 1, 2008, to December 31, 2009)
- 2010: Standard rate increased back to 17.5% (from January 1, 2010, to January 3, 2011)
- 2011: Standard rate increased to 20% (from January 4, 2011)
UK VAT Rate Chart
Here is line graph showing the VAT rate changes in the UK from 1973-today as a chart. There have not been any changes since the VAT was raised to 20% in 2011.
A Final Word on Changes in VAT Rates
VAT rates change due to a mix of economic, fiscal, and political factors. Economic downturns might prompt reductions to stimulate spending, while inflation control could necessitate increases. Governments facing budget deficits or needing funds for public spending may adjust rates accordingly. Broader tax reforms and efforts to harmonize rates with neighboring countries can also drive changes. Political decisions, including election promises and public opinion, play a role, as do global events like financial crises or pandemics.
Frequent changes in VAT rates are avoided to maintain economic stability, as they can create uncertainty for businesses and consumers. The administrative costs of updating systems and altering pricing strategies are significant. Sudden VAT rate changes can also disrupt consumer behavior, affecting spending patterns. Stable tax policies benefit long-term planning for both businesses and governments, fostering confidence and consistency. Politically, frequent adjustments might lead to voter dissatisfaction, making governments cautious about altering VAT rates often.
To calculate your current VAT Return, use our Calculator.
Source’s:
(https://lordslibrary.parliament.uk/value-added-tax-vat-at-50/)
The information above has been verified & approved by a Chartered Accountant.