VAT could hit 20%

Both Labour and the Conservatives are reported to be drawing up plans to hike VAT to up to 20% in a bid to tackle Britain’s £178bn deficit.

A recent report in The Times says that a rise in the tax is thought to be under consideration by both political parties, meaning that a rise in VAT is likely whichever party wins the upcoming general election later this year.

Both parties have denied any current plans to raise VAT but have refused to rule it out.

Sources have told The Times that there is a widely held view amongst the Tories that VAT would have to be pushed up from its current 17.5% rate.

The Treasury is also thought to be mulling the VAT hike as it pursues a more upfront approach ahead of the pre-Budget report which is expected in the next couple of months.