New Year Debt Threat

According to a survey conducted by the national charity, Citizens Advice, almost a fifth of the population (18%) don’t know what VAT stands for, or understand how the 2011 January rate change will affect their budget for living. 

VAT increases on New Year’s Day 2011 from the current rate of 17.5% to 20%, but, according to the findings of the questionnaire one in eight people (13%) are not aware of this fact and nearly a fifth (18%) of those surveyed could not identify the current rate of VAT.

The charity is particularly concerned that such apathy will cause families to suffer a ‘debt hangover’ - not budget properly for the festive season and not be able to cope financially when the changes come in.

58% of Britons say that they do budget for Christmas. The savviest are the younger generation; those aged 24-35 are the most likely age group to ensure they don’t overspend. Women are more likely to worry about cash than their male counterparts, 44% of whom claim they will not be cutting back at all over the party season.

Citizens Advice Chief Executive Gillian Guy says: “Christmas is a time of giving and it’s all too easy to overspend. There are enticing offers and pressures to buy and it can be tempting to ignore how much you are spending, but this may lead to problems in the New Year. Planning, budgeting and organisation are key to avoid getting into debt at Christmas and beyond.

This January could be worse than most for those who are not planning ahead as the 20 per cent VAT increase will put more pressure on budgets. At this time of year we urge people to consider their spending carefully. If you do get into difficulties, get advice as soon as you can.”

For further advice on debt and insolvency issues, contact Gary Sans on 01952 211013 or gary.sans@lblaw.co.uk.