The temporary reduction to the standard VAT rate is due to end on 28 February 2021 and the standard VAT rate will return to 23% from 1st March 2021.
The temporary reduction from 23% to 21% was brought in as part of the Government July stimulus package for six months only from 1 September 2020.
Action Required for Invoices:
If your standard rated invoice has a date on or after 1 March 2021, please apply 23% VAT.
Action Required for Credit Notes:
The VAT rate on the credit note must match the VAT rate on the original invoice.
Example 1: An invoice is raised in January 2021 at 21% VAT. The corresponding credit note is raised in March 2021. The VAT rate on the credit note should match the original invoice; therefore, 21% VAT must be applied.
Example 2: An invoice is raised in March 2021 at 23% VAT. The corresponding credit note is raised in April 2021. The VAT rate on the credit note should match the original invoice; therefore, 23% VAT must be applied.
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