2009 Pre-Budget Report Summary
VAT
Standard rate of VAT
As previously announced the temporary reduction in the standard rate of VAT to 15% will end on 31 December 2009.
The Pre-Budget Report confirms arrangements to smooth the transition for businesses back to the 17.5% standard rate.
- There will be a 'period of grace' for businesses trading across the midnight deadline to charge the lower 15% rate until they close (or until 6 am on 1 January 2010, whichever is earlier).
- Shops will be able to add the extra VAT to prices at the tills for up to 28 days, giving them extra time to complete the re-pricing of their stock.
VAT Flat Rate Scheme changes
The Flat Rate Scheme provides an optional simplified VAT arrangement for businesses with a turnover up to £150,000. The percentages were re-calculated in December 2008 to reflect the temporary reduction in the standard rate of VAT. The flat rate percentages have now been re-calculated to reflect the reversion of the standard rate of VAT to 17.5%. The new rates will be implemented on 1 January 2010.
Changes also include technical adjustments to reflect more up to date business patterns. This means that, for some sectors, the rates will not simply return to the level set prior to December 2008. Virtually all sectors will face an increase because of the increase in the standard rate, although increases in some sectors will be larger than others.
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