As widely expected, the Chancellor George Osborne has announced in today's budget that VAT will rise from 17.5 to 20 per cent from January 4th, 2011.
That's a pretty sizeable increase, and it remains to be seen if retailers will pass the full rise on to their customers. In the meantime, expect to see a rush of "beat the VAT rise" promotions in the coming months.
The Chancellor has also scrapped the "broadband tax" proposed by the previous government, designed to raise up to £175m a year. The 50p-a-month levy on landline telephones proposed by Labour to help pay for next-generation broadband will not go ahead.
Instead, the government will leave the majority of super-fast broadband roll-out across the UK to private investment.
The Chancellor said: "I am happy to be able to abolish this new duty before it is even introduced. Instead, we will support private broadband investment, including to rural areas, in part with funding from the Digital Switchover under-spend within the TV Licence Fee."