(asked on 24th February 2022) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent estimate he has made of the potential additional value to the Exchequer of VAT on fuel arising from the expected increase in energy prices from April 2022.


Answered by
Lucy Frazer Portrait
Lucy Frazer
Secretary of State for Culture, Media and Sport
This question was answered on 7th March 2022

High energy prices reduce VAT revenues. In recognition that families should not have to bear all of the VAT costs they incur to meet their needs, domestic fuels such as gas and electricity are already subject to the reduced rate of 5 per cent of VAT. If people spend more on energy where VAT is 5 per cent, they spend less on goods and services that have on average a much higher VAT rate, thereby reducing VAT revenue overall.

The Government is providing significant financial support – up to £350 – to the majority of households, which will cover more than half of the forecast £700 rise in energy bills for the average household. This support is worth £9.1 billion in 2022-23.
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