Brits to splash out ahead of January VAT hike

Over 13.75 million UK adults (28 per cent) say they plan to go on a shopping spree in the next few weeks in advance of the increase in the standard rate of value added tax (VAT) on 4th January 2011, according to new research from Santander Insurance UK.

On average they expect to splash out around £650 each, providing a whopping £8.9 billion boost to Britain's retailers.  People living in the South East of England are set to go on the biggest splurge and expect to spend approximately £840 on average. Those in the North East are the most frugal, planning to spend around £357 each on average.

However, the bank's research also reveals that almost one in ten (9 per cent) consumers are unaware that the standard rate of VAT will increase from 17.5 per cent to 20 per cent.  This rises to 16 per cent of 18 to 34 year olds.

Electronic items, such as iPods, iPads, mobile phones and TVs, are the most popular items for pre-VAT hike spending sprees, earmarked by 42 per cent of consumers.  This is followed by adult clothes (29 per cent) and alcohol (26 per cent). Big ticket items, such as furniture and white goods are set to be purchased by a further 18 per cent and 15 per cent of consumers, respectively.

The combination of this last minute pre-VAT hike spending, Christmas presents and other new items bought for the festive season means that the average household expects the value of goods in their home over this period to increase by a massive  £1,700.

Santander Insurance is issuing a warning to homeowners to be sure that they have adequate insurance cover to protect them in the event of damage to or theft of their possessions and presents.

Colin Greenhill, Insurance Director, Santander UK said: "High streets will be extra busy over the next few weeks as shoppers look to get in their big ticket purchases before Mr Osborne's January VAT hike.  Combined with Christmas shopping, many households will be packed with a highly valuable assortment of goods, which means that consumers should ensure their home insurance provides the right level of cover for the value of all these additional items."

Santander offers a range of home insurance products to ensure the right level of cover is available throughout the year. For more information on home insurance from Santander, visit santander.co.uk.