As part of the government’s July Stimulus package the standard rate of VAT will be reduced from 23% to 21% for 6 months, beginning on 01 September 2020.
This will affect VAT on many items such as motor vehicles, adult clothing, electrical goods, petrol, diesel, alcohol, most household goods, non-basic food items, many professional services and telecommunications.
Retailers can decide whether to pass the VAT reduction on to customers or not. They can either reduce their prices by two per cent or they can keep prices the same and keep the 2% themselves.
Traders that are registered for VAT should note that if goods or services were supplied before 31 August but the invoice was not generated until 01 September or after then the 21% VAT rate applies.
Also, if you are issuing a credit or debit note it should show the VAT rate from the original invoice. If you supplied and invoiced for goods in August 2020 with a VAT rate of 23% and then issued a credit note after 01 September the credit note should still include the rate of VAT at 23%.
Last updated: 9th September 2020This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.