Shops anticipate VAT rise

High Street bosses are so convinced the new Government will increase VAT to 20pc that one of the UK's largest chains is already altering its prices in anticipation.

One of the UK's best-known retailers, with sales of well over £10bn, is telling its overseas suppliers to start adjusting its price tags on clothing and other products to assume a VAT level of 20pc. The goods in question will hit the shops in February of next year. Meanwhile the impact of a VAT increase on UK households is revealed in new research by The Sunday Telegraph showing that day-to-day living costs in the average home would rise by at least £216 a year if the rate was raised from 17.5pc to 20pc.