As previously announced, the standard rate for VAT will return to 17.5% from 1 January 2010. There are special rules for sales which span the change of rate which apply to goods and/or services which are provided before the change of rate and invoiced afterwards.

In addition where an invoice is issued before 1 January 2010 and where any one of the following conditions is met additional provisions are in place to prevent VAT being accounted for at the lower rate of 15%:

• you supply the goods or services to a connected person (such as another business controlled by you); or
• you provide or arrange funding of your customer’s payment; or
• you issue a VAT invoice to your customer that does not have to be paid in full within six months; or
• the payment or VAT invoice is in excess of £100,000, and this is not normal commercial practice.

The flat rate of VAT applied by traders using the 'flat rate scheme' will also change from 1 January 2010 to reflect the change in the standard rate.

No announcements have been made about any further increases to the VAT rate in future.

Indirect taxes and the ‘green’ agenda
Indirect taxes have also been used to drive the Government’s ‘green’ agenda further:

Climate change levy (CCL) – the reduced rate of CCL which is provided for under climate change agreements will be increased from 20% to 35%. It is intended that this new rate will come into force from 1 April 2011.

Supporting low-carbon growth – the PBR provides for a further £400million to support both business investment in low-carbon growth and help households reduce energy costs. These benefits will be of value to both businesses and individuals and will be phased in over the next three years.

Road fuel duty – main road fuel duty rose by two pence per litre on 1 September 2009. As announced at Budget 2009, fuel duty will also increase by one penny per litre in real terms on 1 April each year from 2010 to 2013.

Other changes introduced by the PBR included a landline duty from 1 October 2010 at a rate of 50p per month for each line, and bingo duty being reduced from 22% to 20% from April 2010!