A quick guide to the VAT rate change
Posted by superuser
on Wednesday 17th of November 2010 |
4 Comment(s)
The standard rate of VAT increases from 17.5% to 20% on 4 January 2011. The reduced rate (5%), the zero rate and current exemptions are not affected by the change.
Comments
SAAS accounting systems are a great start but....
Having a saas based accounting system like Xero or Kashflow is a great start as it should automatically switch the rate from 17.5% to 20% with effect from 4 Jan 2011 (if you forget!), however, there are special rules to consider where, for example, ongoing consultancy services cross over this date - tips in the above quick guide should help.
Interesting also to note that it is a Bank Holiday on Monday 3 January 2011 so if your business normally receives direct debit payments between 1 - 3 of each month then the earliest working day you could receive the Jan 2011 payment is the 4th Jan (aka VAT rise day) - did they plan this...?!
VAT rate change and Xero online accounting
This week Xero online accounting system, www.xero.com, created the option of choosing the 20% VAT code for transactions in preparation for the rate change in January.
Anything set within your own Xero system to default to the 17.5% VAT code will automatically change to 20% on the 4th January. The 17.5% VAT code will still be available as an option.
Xero VAT Change
Thanks Nicola.
That's a great insight. I am glad I do not have to fiddle with my accounting software to adjust VAT rate this time round.
Best regards
Manoj
No hassles with SaaS
I expect most of the online accounting apps will be providing a service like KashFlow and Xero are to deal with all of this seamlessly.
KashFlow will be changing it automatically for all users who opt for it.
Default rates, Repeat Invoices and anything else currently set to 17.5% will be automatically changed to 20%. 17.5% will be left as an option.
Also, quite often overlooked are those on the Flat Rate Scheme. Many will be in the situation where part of their return is calculated at one rate and part at a new rate.
Thankfully we had to deal with all of this last year so have everything in place to make that painless too.