A number of changes to the VAT rules were made as part of the March 2012 Budget. Most of the changes will be implemented on or after 1 October 2012.
- VAT on hot food – One of the most contentious issues announced as part of the Budget related to the change in definition of “hot food”. It is now confirmed that the sale of all hot food, with the exception of freshly baked bread, is standard-rated. This measure will ensure that the sale of all hot food is taxed consistently at the standard rate. The new definition of hot food will be based on an objective test as to whether the food is above ambient air temperature at the time it is provided to the customer
- Sports drinks – Legislation is being introduced to ensure that all sports drinks are taxed at the standard rate. This will ensure that the sale of sports nutrition drinks (mainly carbohydrate, protein and/or creatine based drinks) that are marketed as products that enhance physical performance, accelerate recovery after exercise, or build bulk, are subject to VAT.
- Hairdressers chairs – Legislation will be changed to clarify that rent of a hairdressers’ chair is chargeable to VAT at the standard rate.
- Caravans – The sales of all holiday and leisure caravans are to be taxed at the standard rate. The sales of touring caravans that are less than seven metres long are already standard rated for VAT purposes. The zero rate status will remain for residential caravans that are designed and constructed for year round occupation.
- Taxable turnover threshold – The taxable turnover threshold that determines whether businesses should be registered for VAT, increased from £73,000 to £77,000 from 1 April 2012; the taxable turnover threshold that determines whether businesses can apply for deregistration increased from £71,000 to £75,000 on the same date.
Please give us a call if you have any queries.
Anita Mason, Audit Manager