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The first change in the standard rate of VAT since April 1991 has taken place. As part of the Pre-Budget Report, VAT reduced from 17.5% to 15%. It is due to increase again to 17.5% on 1 January 2010.

Opinion is divided as to whether it will make any difference, given that a £10 purchase will reduce by only 21p to £9.79 - and this at a time when shops are heavily discounting sale prices anyway. According to one estimate, the cost to retailers of reconfiguring their systems will be £300 million, along with another £180 million when the rate changes again.

Special rules apply on a change in the VAT rate. If goods or services have been invoiced or paid for before 1 December 2008 but are not actually supplied until afterwards, the rate of VAT which would normally apply would be that in force at the time of invoice or payment - 17.5%. However, suppliers may choose to override this rule and apply the new rate of 15%. They cannot be forced to do so. A credit note must be issued for the difference, and there is a time limit of 45 days from 1 December 2008 for this.

1 December 2008