Accounting for VAT when the standard rate of VAT returned to 17.5 per cent

Introduction

The standard rate of VAT was temporarily reduced to 15 per cent on 1 December 2008 and returned to 17.5 per cent on 1 January 2010. On 4 January 2011 the standard rate increased to 20 per cent.

For any sales of standard-rated goods or services you made between 1 January 2010 and 3 January 2011 inclusive you should have charged VAT at the rate of 17.5 per cent. If you have a cash business and calculate your VAT using the VAT fraction, you should have reverted to the VAT fraction of seven forty-sevenths for the same period.

The change only applied to the standard VAT rate. There were no changes to sales that are zero-rated or reduced-rated for VAT. Similarly, there were no changes to the VAT exemptions. Any sales you made at these rates were unaffected by this change.

This guide tells you how to account for the change to the standard rate of VAT to 17.5 per cent. It also tells you where you can get further information.

Developed with:

HM Revenue & Customs