Increase in the standard rate of VAT to 20 per cent
Introduction
The standard rate of VAT is currently 17.5 per cent but will be increased to 20 per cent on 4 January 2011.
For any sales of standard-rated goods or services that you make on or after 4 January 2011 you must charge VAT at the 20 per cent rate. If you have a cash business and calculate your VAT using the VAT fraction you must use the VAT fraction of 1/6 on your standard-rated VAT inclusive sales from 4 January 2011.
The change only applies to the standard VAT rate. There are no changes to sales that are zero-rated or reduced-rated for VAT. Similarly, there are no changes to the VAT exemptions. Any sales you make at these rates are unaffected by this change.
This guide tells you how to account for the change to the standard rate of VAT. It also tells you where you can get further information.
Subjects covered in this guide
- Introduction
- How to account for the VAT rate change
- Sales that span the change in rate
- VAT invoices raised or deposits received before 4 January 2011 for sales you make afterwards
- Special VAT schemes for small businesses
- Payments on account
- What VAT you can reclaim
- How to complete your VAT return
- How to correct an error on your VAT return
