ARTICLE · 24 JUNE 2010

VAT Rises But Zero Rates Preserved

CMS Cameron McKenna Nabarro Olswang

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As expected, the Chancellor today announced that the standard rate of VAT is to go up to 20% from 4 January 2011. Contrary to some forecasts, there was no change to zero-rated, exempt or reduced rate supplies and the Chancellor pledged in his speech to retain existing zero rates on food, childrens clothes, newspapers, etc for the duration of this Parliament.

United KingdomTax

Richard Croker

Peter Mason

As expected, the Chancellor today announced that the standard rate of VAT is to go up to 20% from 4 January 2011. Contrary to some forecasts, there was no change to zero-rated, exempt or reduced rate supplies and the Chancellor pledged in his speech to retain existing zero rates on food, childrens clothes, newspapers, etc for the duration of this Parliament.

To effect the VAT rate change there will be transitional provisions (including anti-forestalling legislation) similar to those for the reversion to the 17.5% rate following the temporary decrease to 15% in the last Parliament.

When does this change take effect?

Suppliers will need to prepare for the change of rate - The following rules apply.

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