Lowering VAT on Fuel Bills Won’t Be Possible

Lowering VAT charges on fuel may be politically attractive but is not good news for those who will struggle the most, say leading tax and advisory firm Blick Rothenberg.

Heather Self, a tax partner at the firm, said: ‘Pressure is building for the Government to make domestic fuel costs zero-rated for VAT as customers face increased charges in the spring. While this would be possible now, the UK has left the EU and maybe politically attractive, and it would still not be good news.’

Customers face real problems in paying their heating bills. The Government needs to do more than make an expensive token gesture. If the Chancellor wants to help those most in need, he should think again about reinstating the £20 uplift to Universal Credit, which would give the poorest families £500 cash over the next six months.’

Heather added: ‘Customers face price rises of up to £700 in the Spring.  A VAT cut would only give them about £100 saving, which is not enough to make a real difference to those in greatest need. Those who would gain most are those with the largest houses and highest heating bills – who are not the people most in need.’

‘The VAT reduction is estimated to cost of £1.7bn and is an expensive way to give people a saving of £100 each. There is also no guarantee that gas and electricity companies would pass on all savings to customers unless the cut is specifically priced into the Of gem price cap.’