Increase in the Standard Rate of VAT

The standard rate of VAT will increase from 17.5% to 20% with effect from the 4^th January 2011.

For any sales of standard rated goods or services that you make on or after 4^th January 2011, you must charge VAT at the new rate of 20%.  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^th January 2011.

There are no changes to sales that are:

• Zero rated
• Subject to the VAT at the 5% reduced rate
• VAT exempt

Please visit the HMRC website www.hmrc.gov.uk/vat for detailed guidance on implementing the change.

If you would like advice on how to implement the change for your business, please get in touch.