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Over 50s face £524million bill when VAT returns to norm

Over 50s face £524million bill when VAT returns to norm

03 January 2010 / by Rachael Stiles

It is estimated the pensioners will face an extra cost of £524million a year as a result of VAT returning to 17.5 per cent in January following its temporary reduction to 15 per cent.

The increase in VAT will affect consumers of all ages across the UK, but the over 50s will be one of the groups to feel it most keenly as some of the UK's biggest consumers, predicts over 50s insurer RIAS.

Contrary to the popular misconception that the over 50s are a drain on the economy, RIAS says, they will make a huge extra financial contribution in 2010.

The over 50s outspend younger generations by nearly 13 per cent each week, or about £21, with most of their money going on food, drink, eating out, entertainment, and hobbies, RIAS' research found.

According to the study, over 50s have been spending an average £18.52 a week on VAT in 2009, but this is set to rise to £19 a week with VAT back at 17.5 per cent.

Defying the public stereotype that the over 50s cost society more than they contribute, the 21 million Brits aged 50 and older made a net fiscal contribution of £6.6billion to the UK economy in 2008.

Commenting on the impending rise in living costs, Janet Connor, managing director at RIAS, said: "While the 2.5% increase in VAT may not sound like a huge amount, over a year it really does add up and bolsters the already substantial contribution the over 50s make to the UK public purse.

"There has been a longstanding public stereotype that the over 50s take more from society and the state than they put in. However, this is just not true, with people over 50 contributing millions to the economy."

© Fair Investment Company Ltd