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04/01/2011
VAT Rise Arrives
Businesses from today will be introducing the new VAT rise.
The standard rate of VAT will go up from 17.5% to 20%.
Retailers must now charge the new 20 per cent rate on all standard-rated takings received on or after 4 January 2011. But if a customer pays on or after that date for something they take away (or have delivered) before 4 January, the sale takes place before the rate change and the 17.5 per cent rate will apply.
Retailers who use electronic tills will have to re-programme them, so that the correct VAT rate is calculated and shown on till receipts.
Normally, businesses must use the 20 per cent rate for all VAT invoices they issue on or after 4 January 2011, which are issued within 14 days (or a longer period previously agreed with HMRC) of goods or services being provided. However, where goods or services are supplied before 4 January businesses can choose to charge the VAT at the old rate of 17.5 per cent.
If a business receives a purchase invoice dated on or after 4 January which shows the VAT at 17.5 per cent, only the actual amount shown can be reclaimed.
Consumers should be aware that although the 20 per cent VAT rate should be charged on all standard-rated sales from 4 January onwards, there will be occasions when they might be charged at the current 17.5 per cent rate. If in any doubt as to whether this is correct, they should contact the vendor for an explanation.
The rise is expected to raise an extra £13bn in revenue.
Commenting on the rise Chancellor George Osborne said the move was "tough but necessary".
He added that 20% was "a reasonable rate to set, given the very difficult situation we find ourselves in".
He described the increase as "permanent" and said it would "increase employment”.
Labour Shadow Chancellor Alan Johnson said: "This is a broken promise - this was the big issue of the general election campaign.
"It does nothing for jobs and growth - this year has to be all about continuing the growth momentum. It hits the poorest hardest. For those three reasons this is the wrong tax at the wrong time."
(BMcN/GK)
The standard rate of VAT will go up from 17.5% to 20%.
Retailers must now charge the new 20 per cent rate on all standard-rated takings received on or after 4 January 2011. But if a customer pays on or after that date for something they take away (or have delivered) before 4 January, the sale takes place before the rate change and the 17.5 per cent rate will apply.
Retailers who use electronic tills will have to re-programme them, so that the correct VAT rate is calculated and shown on till receipts.
Normally, businesses must use the 20 per cent rate for all VAT invoices they issue on or after 4 January 2011, which are issued within 14 days (or a longer period previously agreed with HMRC) of goods or services being provided. However, where goods or services are supplied before 4 January businesses can choose to charge the VAT at the old rate of 17.5 per cent.
If a business receives a purchase invoice dated on or after 4 January which shows the VAT at 17.5 per cent, only the actual amount shown can be reclaimed.
Consumers should be aware that although the 20 per cent VAT rate should be charged on all standard-rated sales from 4 January onwards, there will be occasions when they might be charged at the current 17.5 per cent rate. If in any doubt as to whether this is correct, they should contact the vendor for an explanation.
The rise is expected to raise an extra £13bn in revenue.
Commenting on the rise Chancellor George Osborne said the move was "tough but necessary".
He added that 20% was "a reasonable rate to set, given the very difficult situation we find ourselves in".
He described the increase as "permanent" and said it would "increase employment”.
Labour Shadow Chancellor Alan Johnson said: "This is a broken promise - this was the big issue of the general election campaign.
"It does nothing for jobs and growth - this year has to be all about continuing the growth momentum. It hits the poorest hardest. For those three reasons this is the wrong tax at the wrong time."
(BMcN/GK)
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