How will I benefit from the reduction in VAT?
The 2.5 percentage point cut in VAT, from 17.5 per cent to 15 per cent, will come into effect on Monday. Whether consumers benefit depends entirely on whether shops decide to reduce their prices by that amount. Many retailers, particularly small businesses, and shops that sell small value items, may decide instead to keep the extra money. It is also worth remembering that VAT is not charged on some goods, such as food and children’s clothes, so there will be no savings in these areas. There will also be no benefit for gas and electricity customers as VAT on domestic energy bills is already charged at a lower rate of 5 per cent, which is not