Bank of England
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Who will be hit hardest by changes to VAT?

VAT rises take effect today with the rate increasing from 17.5% to 20%.

The government says the increase is necessary in order to lower the deficit.

The increase will cost households in the middle of the income distribution just under £4 per week or just over £200 a year.

Stephanie Flanders reports.

  • 04 Jan 2011