Value Added Tax

From	1 April 2001	1 April 2000
Standard rate	17.5%	17.5%
VAT fraction	7/47	7/47
Registration
- last 12 months or coming 30 days over	£54,000	£52,000
Deregistration - coming year under	£52,000	£50,000
Cash accounting scheme - up to	£600,000	£350,000

Transport

As from 1 April 2001 zero-rating of vehicles adapted for use by disabled persons is to be changed to give disabled people a wider choice of vehicles. New law will provide that VAT on children's car seats will be reduced to the 5% VAT rate, whilst VAT on adult cycle helmets is to be removed altogether from 1 April 2001. From the same date zero-rating has been extended to cover passenger transport vehicles with 10/11 seats.

Further Reduced Rate Changes

As part of regulatory simplification, law is to be re-enacted to make reduced rate supplies (5%) consistent with legislation on other VAT reliefs like zero-rating and exemption. The Chancellor announced that the changes do not change the scope of the reduced rates.

To encourage urban regeneration it has been proposed that certain property conversion and renovation work will become liable to VAT at 5% instead of the current 17.5%. This reduced rate is due to be implemented on the day after Royal Assent. Proposals have also been put forward that provide for the zero-rating, from 1 August 2001, on the sale of renovated houses that have been empty for more than 10 years.

Business Gifts

A change to business gifts limits from £15 to £50 will be introduced from 8 March 2001. This is in line with the de-minimis limits for income and corporation tax and is one of the few combined indirect and direct taxation limits.

Museums and Galleries Benefits

Certain national museums and galleries will be able to recover input tax on their purchases of goods and services with effect from 1 April 2001. The measures proposed will require the introduction of new VAT law.

More Children's Clothing to be Zero-Rated

As from 1 April 2001 it has been announced that the rules relating to the supply of young children's clothing are to be revised and simplified to recognise the increasing size of children and to make the rules easier to apply. More children are likely to benefit from the changes and business administration will be less burdensome.

VAT Representatives

Amendment of the rules for the appointment of VAT representatives is proposed. At present UK VAT regulations enable Customs and Excise to force certain overseas businesses to appoint a UK VAT representative to undertake VAT compliance etc. This power is being removed from 1 January 2002 in respect of countries that have entered into mutual assistance arrangements with the UK.