Purchase Tax

Purchase Tax was a tax levied between 1940[1] and 1973[1] 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 33⅓%.

The tax was subsequently set at differing rates dependent upon individual items' degree of "luxury"[2] as determined by the government of the day.[3]

In connection with the accession of the UK to the European Economic Community[4] Purchase Tax was abolished on 2 April 1973 and replaced by Value Added Tax (VAT), initially set at a rate of 10%, which was shortly afterwards reduced to 8%.[3]


  1. ^ a b "Taxation – Key dates". Parliament.UK. Retrieved 24 December 2014.
  2. ^ "Purchase Tax". Peterice. Archived from the original on 6 October 2008. Retrieved 24 December 2014.
  3. ^ a b "VAT: a brief history of tax". The Guardian. Retrieved 24 December 2014.
  4. ^ "Post-war taxation". Parliament.UK. Retrieved 25 December 2014.