Chancellor George Osborne has announced today that the rate of VAT (Value Added Tax) that we pay in the UK will rise to 20% (from 17.5%) on 4th January 2011. This is just one of the measures outlined in the "emergency budget", Osborne's first as Chancellor. It was widely predicted that the VAT rise would be announced as one of the ways the new coalition Government would attempt to reduce the huge budget deficit inherited from the outgoing Labour Government. So from 4th January 2011 most things we purchase as consumers will be more expensive (assuming retailers pass on the VAT increase and don't absorb it themselves). So those of you planning any significant purchases such as a new car, expensive LCD or large building project may want to bring forward this purchase so that you are paying VAT at 17.5% rather than 20% And don't forget, the increased rate of VAT will also apply to services supplied by VAT registered companies such as website designers and accountants.