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Published: March 16, 2020

UK Budget 2020: What you need to know about the VAT changes

The UK Government published Budget 2020 on 11th March. The measures were announced by Chancellor Rishi Sunak

The UK Government published Budget 2020 on 11th March. The measures were announced by Chancellor Rishi Sunak. Although Coronavirus took centre stage in the documents, here is everything you need to know regarding UK budget 2020 VAT changes. 


Zero VAT on e-publications

The government will introduce legislation to apply a zero rate of VAT to e-publications from 1 December 2020, which will make it clear that e-books, e-newspapers, e-magazines and academic e-journals are entitled to the same VAT treatment as their physical counterparts. The government expects the publishing industry, including e-booksellers, to pass on the benefit of this relief to consumers.


VAT and Excise System

HMRC said that it wants to make the most of the opportunity of leaving the EU to make the UK’s VAT and excise system more business-friendly while continuing to recognise the significant contribution of VAT and excise towards the public finances. The Budget meets the government’s commitment to review the alcohol duty regime to ensure it works for UK producers and consumers.


VAT Postponed Accounting 

From 1 January 2021 postponed accounting for VAT will apply to all imports of goods, including from the EU. This will provide an important boost to those VAT registered UK businesses which are integrated in international supply chains as they adapt to the UK’s position as an independent trading nation.


VAT Quick Fixes Directive

The government will introduce legislation to introduce simplified rules for the VAT treatment of intra-EU movements of call-off stock, allowing businesses to delay accounting for VAT until the goods are called-off. The legislation will apply to goods which are removed from a Member State on or after 1 January 2020

Long-term cross-border goods policy

The government will launch an informal consultation over spring 2020 on the VAT and excise treatment of goods crossing UK borders after the EU exit transition period.

Review of the UK funds regime 

The government will undertake a review of the UK’s funds regime during 2020. This will cover direct and indirect tax, as well as relevant areas of regulation, with a view to considering the case for policy changes. The review will begin with a consultation, to be published at the Budget, on whether there are targeted and merited tax changes that could help to make the UK a more attractive location for companies used by funds to hold assets. The review will also consider the VAT treatment of fund management fees and other aspects of the UK’s funds regime.

VAT on female sanitary products:

HMRC has finally abolished VAT for female sanitary products from January 2021. 

The Future of MTD

The government will publish an evaluation of the introduction of Making Tax Digital for VAT, along with related research. VAT IT is monitoring Making TAx Digital phase ii that will be launched in April and will adopt all best practices regarding domestic VAT reclaim and compliance in accordance with MTD’s digital transformation and API needs.

(source: HMRC)

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