Vat And Leases – November 2010

VAT rates have fluctuated over the last 2 years whereas historically they have stayed fairly constant. The standard VAT rate was 17.5% from 1991 until 2008 when, in an attempt to boost the flagging economy, the rate was lowered to 15% between 1 December 2008 and 31 December 2009. Since then the rate has returned to 17.5% but in the new Government's first budget in June the Chancellor announced that the rate will increase to 20% from 4 January 2011.

VAT on rent

The tax point for rent is usually either the date when the tenant pays the rent, or the date when the landlord issues its VAT invoice, whichever happens first. The VAT rate which should be taken into account is the one in force at that tax point. Assuming that rent is paid in advance on the usual quarter dates, the 25 December 2010 rent demand should therefore include VAT at the rate of 17.5% and the 25 March 2011 demand should include VAT at 20%.