VAT rate to return to 17.5% (as expected)
In his pre-Budget report, the Chancellor confirmed that, as planned, the VAT rate will return to 17.5% with effect from 1 January 2010. Businesses now have certainty about the changes that they need to make to implement the January rate change. Following the success of our "rate change" telephone helpline last year, Deloitte will be launching a new helpline soon, to provide help to businesses in the run up to and immediate aftermath of the change of rate.
Bingo Duty reduction
The rate of Bingo Duty is to be reduced from 22% to 20% after the next Budget. The Government increased the rate of Bingo Duty from 15% to 22% earlier this year, a move that proved unpopular with bingo clubs and players. The reduction to 20% is likely to save the industry in the region of £10 million a year. For more information, or to discuss the change, please contact Barney Horn on 0121 695 5902.
Insurance Premium Tax –administration services to be subject to IPT
The Chancellor has announced a change in the law to reverse the effect of the High Court's decision in the case of Homeserve Membership Limited (http://www.bailii.org/ew/cases/EWHC/Ch/2009/1311.html) earlier this year. The Court decided that "unbundled" services connected with a home insurance product were not subject to IPT under the current law. HMRC has published draft legislation and an explanatory note (http://www.hmrc.gov.uk/pbr2009/ins-premium-tax-0360.pdf). The change affects premiums received after 9 December 2009 and is expected to raise £10 million in a full year. For more information about the implications of this change, or to discuss IPT generally, please contact our insurance expert David Fownes on 020 7007 2145.
Climate Change Levy – Reduced rate changes
The reduced rate of Climate Change Levy, which is available to energy intensive businesses under climate change agreements is to be increased from 20% of the main rate to 35% of the main rate. The change is expected to be made in the Finance Bill 2010, to take effect from 1 April 2011 and is estimated to raise £50 million in a full year. Affected businesses will need to issue new certificates to their suppliers to confirm entitlement to the revised reduced rate.
On a more positive note, the plastics and laundries sectors are to join the list of energy intensive businesses which can benefit from the reduced rate of CCL (provided that they enter into climate change agreements. For more information, or to discuss the changes, please contact Michele Hood on 0207 007 8923.
VAT Flat Rate Scheme
As a result of the return of the VAT rate to 17.5% in January, the simplified VAT flat rate scheme that can be used by businesses with a turnover of up to £150,000 is being revised. The percentages applied by businesses using the scheme will be increased to take account of the rate rise and various other technical changes. The new rates will have effect on and after 1 January 2010.
See our free to access VAT Package website (http://www.deloitte.com/view/en_GX/global/services/tax/indirect-tax/article/93198d79f3162210VgnVCM200000bb42f00aRCRD.htm) for information about the implementation of the VAT Package changes around the EU and the Deloitte Indirect Taxes Website (http://www.deloitte.com/view/en_GX/global/legacypagenotfound/index.htm) for more information about Deloitte's International and UK Indirect Tax services.
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