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VAT Update UK: changes to VAT 2020

The UK government announces the following VAT changes, presenting the budget 2020:

  • VAT on e-publications – The Government will introduce legislation to apply a zero rate of VAT to e-publications from 1 December 2020, to 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.
  • 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.
  • Abolition of tampon tax – From 1 January 2021 the government will use freedom from EU law to enable a zero rate of VAT to be charged on women’s sanitary products.
  • Long-term passengers’ policy consultation – The government is publishing a consultation alongside Budget to gather views on the potential approach to duty- and tax-free goods policy after the transition period following the UK’s departure from the EU.
  • 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.
  • VAT on fund management – As announced on 4 March 202099 the government is legislating to clarify when fund management services are exempt from VAT.
  • VAT on financial services – The government will set up an industry working group to review how financial services are treated for VAT purposes.
  • 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 (sic).
  • VAT Partial Exemption – Following the recent call for evidence on the simplification of the VAT rules on Partial Exemption and the Capital Goods Scheme,100 the government will continue to engage with stakeholders in relation to their responses and will publish a response in due course.