Consumers ‘will benefit’ from VAT cut

The reduction in indirect taxes announced by Alistair Darling in the pre-Budget report have helped consumers regain some control over their finances, it has been claimed.

Head of personal finance at money website Fool.co.uk David Kuo explained that the 2.5 per cent cut in value added tax (VAT) will result in “a gradual relaxing of household finances”.

Figures from Fool.co.uk suggest the average family will save approximately £42 a month as a result of the VAT reduction and Mr Kuo has urged consumers struggling financially to pay off any outstanding money owed with the windfall.

“Consumers with debts should first consider paying down outstanding loans,” he explained.

Those looking to make the most out of the savings they may make through the VAT cut may wish to draw up a debt management plan to help them manage their finances.

The comments follow recent research by Axa, which found that many people will not be increasing their spending as a result of tax cuts.

By Tom Musk