Purchase Tax

Purchase Tax was a tax on 'luxury' goods sold in the UK from 1940 until 1973.

On 21 October 1940, during World War II, Purchase Tax was introduced at a rate of 33 ¹⁄₃% as a tax on sales of "luxury" goods in order to reduce the deemed wastage of raw materials.

At various times the tax was set at different rates depending the government-determined degree of "luxury" of the item.

In preparation for joining the European Economic Community (EU) on 2 April 1973 Purchase Tax was abolished and replaced by Value Added Tax (VAT) at a rate of 10%, shortly to be lowered to 8%.