VAT back at higher rate

After over a year of reduced VAT the rate went back to 17.5 per cent at midnight last night (December 31).

The decrease was brought in by the United Kingdom's Chancellor of the Exchequer Alistair Darling in the wake of the major banking crisis in the autumn of 2008.

The purpose of lowering the tax was to provide a saving for customers, with the aim of increasing spending and revitalising the economy.

The Isle of Man's rate is tied to that in the UK, so Manx consumers are also paying more tax on their purchases from today.

A special arrangement was put in place to simplify matters for traders who operated past midnight on December 31.