VAT increase today – 04.01.11
The government hopes that today’s VAT increase from 17.5% up to 20% will raise £13bn a year to tackle Britain’s deficit and will not risk tipping the economy into a fresh downturn as Labour has claimed. However the Labour leader, Ed Miliband, has claimed that it will cost the ‘average family’ an additional £7.50 per week, warning that this is the ‘Wrong tax at the wrong time’.
So what does the VAT increase mean to us really?
Something which would have cost £9.99 will now cost £10.20, a television for example costing £500 will now cost £510.64 and a car costing £15,0000 will now cost £15,319.15 (source BBC News).
Don’t forget not everything has VAT on it – there is no VAT on food, children’s clothing, newspapers & magazines.
As a business owner you need to ensure that your sales invoices have the new VAT rate on them today and if you do your own bookkeeping you need to make sure you are using the correct rates.
Also check the rate of VAT you will be paying if you are registered under the flat rate scheme; a full list is on the HMRC website.
HMRC have provided a detailed guide to the vat increase for business owners which is worth having a look through as it is your own responsibility to get it right!
Should you have any questions or need any help – just ask ‘sara saylavy’!