So the vat rate is likely to rise to 20% in the new year costing people thousands of pounds more on their home improvement work. Word out there is that it is likely to cause a slow down in the economy. I have even heard of some tradesmen thinking of de-registering for vat because they fear people won’t pay the extra cost.

It’s just possible that it might have a negative effect especially as we humans tend to react with our emotions rather than with reason. The truth of the matter is that 20% is in real terms only a rise of 2.5% over the current rate of 17.5%, ie; £2.50 in every hundred pounds.

Reason would argue that if I couldn’t afford £1025 to do the work then I really couldn’t afford £1000. Likewise if I couldn’t afford £4100 then I couldn’t really afford £4000.

I don’t like the thought of vat increasing either but lets use a bit of reasoning to put things into perspective.