With the new year almost upon us, there is one thing no one is looking forward to – an increase in the rate of VAT. As of the 4 January 2011 the rate of VAT will increase by 2.5% to 20%.
This was the preferred route by the new coalition Government to raise public funds, as opposed to the alternative – a hike in income tax.
The increase in VAT may have a noted impact in the difference between a company’s input and output tax. This is often a primary consideration when a business decides whether or not to become VAT registered. Advice should be taken, especially if your customers are the general public.
Care should also be taken if you invoice for goods or services prior to 4 January 2011 and deliver them afterwards. Services provided prior to 4 January 2011 should be taxable at 17.5%, but again if you bill after 4 January 2011 for these services you should take advice.
Merry Christmas to all from Eaves & Co Specialist Tax Advisors