30 Sep 2010

VAT

Key VAT Rates

 From 01.04.08From 01.12.08From 01.01.10From 04.01.11
Standard rate17.5%15.0%17.5%20.0%
VAT Fraction7/473/237/471/6
Reduced rate5%5%5%5%

22 July Emergency Budget

With effect from 4 January 2011, the standard rate of Value Added Tax will increase to 20 per cent, with antiforestalling measures to be introduced.

The Budget also announces that sectoral rates for the VAT Flat Rate Scheme (FRS) will be updated. Details of new sectoral rates will be available on the HMRC website.

Registration thresholds

 From 01.14.08From 01.05.09From 01.04.10From 01.04.11From 01.04.12
Annual Registration Limit£67,000£68,000£70,000£73,000£77,000
De-registration Limit£65,000£66,000£68,000£71,000£75,000

The increase in the taxable turnover threshold means that a person will have to apply for registration if:

  • at the end of any month, the value of the taxable supplies made in the past 12 months or less has exceeded £70,000; or
  • at any time there are reasonable grounds for believing that the value of the taxable supplies to be made in the next 30 days alone will exceed
    £70,000.

The reduced rate applies to:

  • Children’s car seats
  • Children’s car seat bases  (From 1 July 2009)
  • Contraceptive products
  • Domestic fuel or power
  • Energy-saving materials: installation
  • Heating equipment, security goods and gas supplies: grant-funded installation or connection
  • Installation of mobility aids for the elderly
  • Residential renovations and alterations
  • Residential conversions
  • Smoking cessation products
  • Welfare advice or information
  • Women’s sanitary products

Fuel scale charges

Businesses which recover input tax on fuel used for private motoring must account for VAT according to a scale charge where fuel is put to a private use.  New scale charges apply from 1 May 2009, which must be used the from the start of the next prescribed accounting period beginning on or after that date. The changes are made to reflect changes in fuel prices. Also amended is the table of CO2 bands to maintain alignment with those used for direct tax purposes. Details are to be Notice in Notice 700/64 on the HMRC website.

The scale charge for a particular vehicle is determined by its CO2 emissions figure. Where the CO2 emissions figure of a vehicle is not a multiple of five, the figure is rounded down to the next multiple of five to determine the level of charge. For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the two figures should be used. For cars which are too old to have a CO2 emissions figure HM Revenue & Customs (HMRC) have prescribed a level of emissions by reference to the vehicle’s engine capacity (cc).