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Budget 2010 - VAT

There was no change in the standard rate of VAT today. It is widely expected that the VAT rate will be increased after the Election.

The main VAT changes were:

  • With effect from 1 April 2010, the VAT registration threshold will increase to £70,000. The threshold for deregistration will increase to £68,000. The threshold for registration and deregistration for EU acquisitions will increase to £70,000. (BN45)
  • The VAT on fuel scale charges has been updated to reflect fuel prices. The revised figures will apply to VAT periods beginning on or after 1 May 2010. (BN 44)
  • With effect from 1 September 2010, there will be changes made to the rules for zero rating of 'qualifying aircraft'. (BN 46)
  • The announcement of a future VAT exemption for EU “cost sharing” arrangements by charities/other affected sectors.   
  • Changes to the place of supply rules for gas, electricity, heat and cooling with effect from 1 January 2011. (BN47)
  • The staged implementation of new penalties for late filing of VAT returns and payment of VAT. Effective dates to be announced.
  • Future legislative changes to the rules for recovery of VAT on assets purchased for both business and private purposes.(BN 50)
  • With effect from 31 January 2011, certain postal services provided by the Royal Mail will become standard rated.  This affects services such as Parcelforce but not the normal stamped mail which will remain exempt from VAT.  

HMRC’s website contains the full set of Budget Notices on the above.



Date: 24th March, 2010
Author: Jane Stacey


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