VAT rate to increase to 17.5% from 1 January 2010
As expected, the Budget included an announcement that the VAT rate is to revert to 17.5% with effect from 1 January 2010. The Finance Bill 2009 will make provision for the continuance of the 15% rate through December 2009 (the legislation introducing it only covered the period to 30 November 2009) as well as changing the rate back to 17.5%. The change is accompanied by an announcement of the expected (and previously trailed) anti-forestalling provisions, which will impose an extra 2.5% charge on certain transactions which attempt to preserve the effect of the 15% rate beyond 1 January 2010.
"VAT Package" changes
Many of the previously announced changes needed to implement the EU's "VAT Package", which start coming into force on 1 January 2010, were re-announced in the Budget. These include changes to the place of supply of services, changes to the time of supply for "reverse charge" services, the introduction of sales listing for cross-border services and the introduction of an electronic refund scheme for VAT incurred in other Member States.
New fuel scale rates from 1 May 2009
Businesses that provide fuel for employees' private use will need to use the new scale rates announced in the budget, with effect from their first accounting period beginning after 30 April 2009. The change reflects the increase in fuel prices since the scale charges were last revised.
No VAT on bingo participation fees - Bingo Duty and Gaming Machines
The Budget included an announcement that, with effect from 27 April, VAT exemption will be extended to certain charges for participation in games of bingo. The announcement also covers an increase in the rate of Bingo Duty (to 22%) and some technical changes relating to gaming duty and gaming machines. It has also been announced that the Government will be consulting on moving the taxation of gaming machines to a gross profits basis.
Lower rate of VAT for child seat bases
The 5% VAT rate will apply to child car seat bases from 1 July 2009. The reduced rate already applies to child car seats, booster cushions, etc.
Increase in the VAT registration and deregistration thresholds
As usual, the VAT registration and deregistration thresholds have been increased. The registration threshold goes up to £68,000 (from £67,000) and the deregistration threshold to £66,000 (from £65,000).
Other indirect tax changes
The Budget saw the usual round of increases to alcohol and tobacco duties. The rate of Landfill Tax will be increased to £48 per tonne from 1 April 2010. There are to be technical changes to Climate Change Levy and Landfill Tax and a consultation on modernising Landfill Tax.
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