VAT Rises to 20% - How will this affect your business?

Today’s Emergency Budget included a whole host of measures designed to be, in Chancellor George Osborne’s words, ‘tough but fair’ – including a rise of the rate of Value Added Tax (VAT) to 20% as from 4 January 2011. But what does this mean in reality for you and your business?

The practical side – updating your records

If you are using an online accounting system such as Fusion Accounts, you don’t need to worry about waiting for delivery of new software and then installing a complex upgrade to ensure your invoices and reports reflect the right VAT rate – this is all done for you automatically without you having to lift a finger. However, if you’re a retailer, you’ll need to go through the process – again – of repricing your products at point of sale to ensure that you’re up to date. As many retailers use the Christmas period to perform stock takes, it probably makes good sense to combine the two. Remember that not all products are liable to the standard rate VAT – such as children’s products and certain foodstuffs – so check with your accountant if there’s anything you’re unsure of. More...