Britain will be levying the fifth-lowest value-added tax rate in Europe after it reverts to 17.5 per cent in January, according to a survey that is likely to reinforce expectations of further rises after the general election.

A survey by KPMG, the professional services group, showed that the European Union average VAT rate has risen to 19.8 per cent in the past year, with the UK’s current 15 per cent rate the joint lowest in Europe.