brittish gas vat?

Question

is 5 percent and not 17.5 why

Answer 1

European rules state that there should be two rates of VAT - a standard rate for most things and a lower rate for more essential items. The standard rate has to be a minimum of 15% and the lower rate 5%.

Now we introduced VAT in the UK in 1973, before we joined the Union. We zero-rated many essential items. When we joined the EU we had to have special permission to keep the zero-rate on those items. This is called a derogation. The derogation has to be renewed at regular intervals.

In the 1990s the Conservative government decided to change the rate on gas and electricity to the standard rate. To ease the burden they planned to do this in two stages and so increased the rate to 8% as a temporary measure.

The final increase never came as they lost the election. Labour wanted to reverse the Conservative decision (as many incoming parties are wont to do) but here was a problem. We could hardly claim that it was necessary to keep the zero-rate on this expenditure since we had already been paying 8%. So our derogation could not be reinstated.

They were only allowed to classify electricity and gas at the lower rate and had, therefore, to charge 5%, the minimum allowed.

Answer 2

The Vat level on Fuel is capped at 5%. Often called fuel tax rather than VAT as 17.5% is the standard VAT rate. There are a few other weird rates in the VAT system, books are rated at 0% VAT!