Last December, the Government cut the VAT rate from 17.5% to 15% in an attempt to boost spending.
However, the rate is to revert back to the normal 17.5% level from 1 January 2010 but research shows that Britons are unaware and unprepared.
Research from Auto Trader shows that 12 million Brits are unaware of the rise with almost one third of Brits admitting they will be forced to review their spending habits.
However, more than half of Brits (55%) believe the rise is to make money from the taxpayer, while one in 10 people expect the Government to increase VAT to 20%.
In the meantime, one in 10 people are unaware that the Government’s car scrappage scheme comes to an end in February.
The ‘cash for bangers’ scheme, which was recently extended to cover an additional 100,000 cars and vans, pays consumers £2,000 to get rid of their old cars and replace it with a more environmentally friendly car.
Figures show that one in 20 people intend to buy a car within the next three months. Therefore, consumers are urged to act fast in order to take advantage of the lower VAT rate.
Commenting on the impending VAT rise, Matt Thompson, Marketing Director at Auto Trader, said: “The rise in VAT and the end of the car scrappage scheme make a compelling case for bringing your car purchases forward to before Christmas. Our research has proven that the public is still lacking much of the critical information on both proposals and we are highlighting these issues so that consumers can act now.”