Guide to VAT-Free Goods and Services

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by: MarkeD
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Word Count: 571
Date: Sat, 27 Mar 2010 Time: 2:40 AM
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You'll certainly feel the pinch If a new government increases VAT, but not from these VAT-free goods and services.

Now that Britain is shouldering a colossal £178 billion deficit, rumours abound that the next government - Labour, Tory, or even a Lib Dem-involved coalition - will have to increase VAT to help lighten the burden of debt.

Following January's reversion to 17.5% VAT, some quarters expect a further 1% rise to arrive later in the year, whilst others expect a 2.5% jump to 20% VAT - a move that would bring around £13 billion annually into the national coffer.

Although the Treasury needs to boost income if inroads are to be made towards balancing its books, a VAT increase won't be welcomed by the public. With more petrol duty increases on the way, plus pay packets already threatened by increased national insurance contributions, consumers may be facing a prolonged spell of belt tightening.

VAT-Exempt or 5% VAT Goods and Services

But whatever happens to the VAT standard rate, the price of some things, in theory, should remain largely unaffected because they are either VAT-free or incur just 5% VAT. In practice, however, prices tend to increase across the board to cover such things as increased delivery costs, but the following items shouldn't rise to the same degree. Here's a rundown of VAT-free or 5% VAT goods and services, and a complete list can be found.

Vat-Free Foods

Note that the following list refers to food bought in shops, and not in restaurants, cafes, stalls etc.

Raw meat and fish; vegetables; fruit; cereals; nuts and pulses; culinary herbs; bread, rolls and pitta; biscuits (though not the nice kind that are topped or covered in chocolate); cakes; sauce; soup; vegetable oils, corn; sesame seed, sunflower seed, soya; canned and frozen food other than ice cream; salt; sweeteners; chilled or frozen ready meals; sandwiches (as a grocery item); wafers and cones; milk and flavoured milk drinks (including milk shakes); tea, cocoa, drinking chocolate and coffee (unless sold hot for consumption on the premises); and many more.

Vat-Free Everything Else

Physical education and sports activities; prescriptions; health services provided by registered doctors, dentists, opticians, pharmacists and other health professionals; equipment for blind, partially sighted or disabled people; cycle and motorbike helmets; protective boots and helmets for industrial use; donated goods bought from charity shops; burial or cremation costs; tolls for bridges, tunnels and roads operated by public authorities; printing (brochures, leaflets and pamphlets); postage stamps for the UK; books, magazines and newspapers; baby wear; children's clothes and footwear; education and training; betting and gaming; bingo; lottery; and last but not least - financial services like loans or credit, and insurance services such as car insurance or home cover.

5% VAT Goods and Services

Children's car seats and boosters; carrycots; domestic gas, electricity and water; nicotine patches and gum; home insulation installation; and mobility aids for the elderly.

Remember, follow the link to see a complete list of VAT-free or 5% VAT goods and services.

Finally, here's one we can all get behind. Let's breathe a collective sigh of relief because if you're in the market to buy... an airship... then you'll find there's no VAT to pay. The queue begins right here.

About the Author

Read more about gas and electricity at http://www.confused.com