As the UK faces a ‘cost-of-living tsunami,’ the Treasury is set to receive a £1 billion ‘VAT windfall.’


As Brits face a ‘cost-of-living tsunami,’ the Treasury is expecting a £1 billion ‘VAT windfall.’

According to Tory MPs, the Treasury will receive a £1 billion “VAT windfall” in April as a result of the expected increase in energy bills.

In April, bills are expected to rise by around £700 per household, due to higher council tax and a 1.25 percent increase in national insurance.

Household incomes will be squeezed just as MPs are set to receive a 2.7 percent pay increase on April 1.

Craig Mackinlay, chairman of the climate change skeptic Net Zero Scrutiny Group, believes the Treasury should reconsider the windfall.

“This windfall should not be accepted by the Treasury, and if it is, it should be targeted at hard-pressed families,” he told The Telegraph.

The Treasury normally receives £2.5 billion per year from the 5% VAT on heating bills, but the cap on energy bills is set to be increased by 50% in April, subject to an Ofgem review on February 7.

The Treasury is expected to receive an additional £1 billion in VAT if the increases are approved.

According to a Treasury source, there would be no windfall because higher prices lower VAT revenues.

“There has been no VAT windfall,” they told the Telegraph.

“High energy prices reduce VAT receipts, which are expected to be £2 billion lower this year than before the pandemic.”

Some Conservative MPs have suggested slashing aid or international development budgets to help low-income families affected by rising energy prices.

The windfall comes after reports that one million people across the country will be hit by a “stealth tax” that will force them to pay a higher income tax rate by 2026.

Jake Berry, chairman of the Northern Research Group, told Times Radio that the government should focus on the cost-of-living crisis as soon as the ongoing Covid pandemic is over.

“It feeds into a broader concern about the impending cost-of-living tsunami in the UK,” he said.

“I’m hoping that as we move past the Covid pandemic, the government’s focus will quickly shift to the financial strains on families.”

“One of the things putting significant pressure on people’s disposable income is this sneaky tax increase.

“At this time, these challenges are receiving insufficient attention.”


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