Purchase Tax

{{Short description|Tax once levied on the wholesale value of luxury goods sold in the United Kingdom}}

The Purchase Tax was a tax levied between 1940{{cite web|url= http://www.parliament.uk/about/living-heritage/transformingsociety/private-lives/taxation/keydates |title=Taxation – Key dates |work= Parliament.UK |accessdate=24 December 2014}} and 1973 on the wholesale value of luxury goods sold in the United Kingdom. Introduced on 21 October 1940, with the stated aim of reducing the wastage of raw materials during World War II, it was initially set at a rate of 33.33%.

The tax was subsequently set at differing rates dependent upon individual items' degree of "luxury"{{cite web|url= http://www.peterice.com/purchasetax.htm |title=Purchase Tax |archive-url=https://web.archive.org/web/20081006140448/http://www.peterice.com/purchasetax.htm |archive-date=6 October 2008 |work=Peterice |accessdate=24 December 2014}} as determined by the government of the day.{{cite web|url= https://www.theguardian.com/money/2010/dec/31/vat-brief-history-tax |title= VAT: a brief history of tax |work=The Guardian |date= 31 December 2010 |accessdate=24 December 2014}}

The 33.33% rate was increased to 66% for cars costing over £1,000 in 1947 and this rate was extended to all cars from 1951. In 1953, it was reduced to 50%.{{cite journal |author= |date=24 December 1954|title=Purchase Tax History|journal=The Autocar|publisher=Iliffe & Sons Ltd|location=London|pages=985}}

In connection with the accession of the UK to the European Economic Community,{{cite web|url=http://www.parliament.uk/about/living-heritage/transformingsociety/private-lives/taxation/overview/postwar/|title=Post-war taxation|work=Parliament.UK|accessdate=25 December 2014}} the Purchase Tax was abolished on 2 April 1973 and replaced by the Value Added Tax (VAT), charged on most goods and services, which is currently charged at a rate of between 5 and 20%.