Price hikes to be aware of in 2011
Try our new VAT calculator to find out how much you will pay after the VAT rise on 4 January.
It's hard to predict how much petrol prices will go up as the raw commodity price varies. But we do know that petrol prices will increase by 0.76p per litre (around 1p with VAT included) in January, owing to the levy increase announced in the previous budget.
The AA estimates that the VAT hike means a further 3p can be added to this, so petrol will cost roughly 4p more per litre, which means that filling up the average 50-litre car every two weeks will cost an extra £250 a year.
The Bank of England has forecast energy price rises of 5% in early 2011. Rising wholesale prices will force suppliers to push up their retail charges, meaning our electricity and heating bills will once again be on the up.
A number of the big energy companies have already put up their prices, npower being the latest. Its increases of 5% will see its average dual fuel bill customer pay £65 more a year.
Train tickets will be 6.2% more expensive in the new year, according to the Association of Train Operating Companies.
The Office of Rail Regulation forecasts that the average price of a single journey will increase from £4.89 to £5.19.
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.