UK Govt. cuts VAT to 15%, increases income tax

The UK Finance Minister, Alistair Darling, decreased the VAT level 2.5 points on Monday, down to 15%, the lowest level allowed by the European Union, in an attempt to stimulate the economic growth, Reuters informs. The cost of the VAT decrease is expected to reach some 12.5 billion pounds sterling per year and will come into force starting on December 1.

Darling also announced the growth of the income tax to 45% for earnings over 150,000 pounds (223,700 US Dollars), starting in April 2011, after the next general elections. The maximum income tax at this moment is 40%.

The UK Finance Ministry also updated the predictions for governmental loans, from 78 to 43 billion pounds, for the 2008-2009 fiscal year.

A slight growth is also expected to take place in several steps for the taxable income of small companies. The tax will reach eventually 22%, from the current 21% level.