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By: MarkJ - 4 January, 2011 (6:20 AM)
uk internet costThe cost of going online in the UK, not to mention a whole lot of other things, has today gone up by +2.5% after the government increased the rate of Value Added Tax (VAT) from 17.5% to 20%. As a result the monthly cost of a typical broadband ISP connection is likely to suffer.

For example, before now anybody paying £20 per month +vat (excluding VAT) for broadband will have had to add +£3.5 to accommodate the previously standard UK rate of +17.5%. However as a result of today's controversial change you will now need to add an extra +50p on top, which brings the total to £24 per month.

Small changes in the underlying rate of tax can ultimately mount up and is especially dangerous for those who must survive on a low income. In addition some ISPs could try to use the VAT rise to mask more extensive price increases, which we'll be keeping a close eye on.

As usual we intend to update our ISP listings database with the new changes, a somewhat time consuming process that we're beginning today (some ISPs still have not corrected their prices, which slows us down). The major ISPs will be updated first, with smaller providers to follow.

There is no clear indication of whether or not the UK's rate of VAT will be reduced back to 17.5% in the future. The Treasury hopes its move will raise an extra £13bn in tax this year and help to offset the country's deficit.
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