VAT will return to a standard rate of 17.5% on 1 January 2010, the chancellor announced today. The temporary reduction in the standard rate of VAT to 15% will end on 31 December 2009. It has delivered a stimulus of about £11.5bn into the economy, the Treasury said. There will be a 'period of grace' for businesses trading across the midnight deadline to charge the lower 15% rate until they close (or until 6am, whichever is earlier) and plans to let shops add the extra VAT to prices at the tills for up to 28 days, giving them extra time to complete the re-pricing of their stock. The rates under the flat rate scheme are amended to reflect the end of the temporary reduction of the standard rate of VAT, as well as the latest data on VAT payments by the various sectors. Richard Baxter, managing director at tax advisers Alvarez & Marsal Taxand, said: 'It's a shame that there have been no concessions and the VAT rate will return to normal in January. The reduction has been a costly exercise for the Exchequer at roughly the £12.4bn anticipated this time last year, and it's debatable how much it has really contributed to consumer spending. Businesses now have to go through the upheaval and cost of transitioning their systems and processes back to the 17.5% rate.'