The UK VAT increase from 17.5 per cent to 20 per cent on Tuesday, January 4th, could have repercussions for property in Spain and the country's other nearest overseas neighbours.

A number of international trends are reported in light of the tax increase, with one in eight Britons surveyed by holidays booking site Sunshine revealing they would consider moving to property in Spain and other locations abroad to escape the higher tax.

Spain in particular proved popular in the survey, thanks to its lower taxation regime which operates at a standard rate of 18 per cent – similar to the UK's level before today's rise.

Closer to home, many travellers reveal that they booked holidays well in advance of the VAT rise in an attempt to avoid paying the premium.

For those still to book, Peter Hayman, director of travel insurer P J Hayman & Company, warns that cutting back on insurance cover represents "a danger" in the new economic environment.

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