Budget 2015 – VAT

There were no changes announced to the rate of VAT.

The VAT registration and de-registration limits have been increased with effect from 1 April 2015 to £82,000 and £80,000 respectively

Prompt payment discounts

A reminder that, from 1 April 2015, businesses will have to account for VAT on prompt payment discounts.

Currently, no VAT is charged on the discount, even if the customer pays the full amount.

An example: Say business invoices £1,000 plus VAT with a 10% early settlement discount offered.

Under the current rules, the invoice would be for £1,180 (£1,000 plus VAT on the amount due after the discount).

Under the new rules, the invoice would be for £1,200 – £1,000 plus VAT on the whole amount at 20%.

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