As you are aware the Government have announced a reduction in the VAT rate from 17.5% to 15% from 1st December 2008. This is seen as way of stimulating consumer spending and giving a boost to the UK Economy.

The change will cause a number of practical issues particularly with accounting systems, VAT returns and pricing information. The issues on the whole are straight forward to deal with but to help you deal with them we have included in this message an email link to the HMRC Guidance about the change. The Guidance is clear and comprehensive so please take 5 minutes to read the detail shown.

http://www.hmrc.gov.uk/pbr2008/measure1.htm

• As a result of falling oil prices, pump prices have now fallen by more than 20 pence per litre from their July peaks. The Pre-Budget Report therefore announces that the 2 pence per litre increase in fuel duty planned for 2008 will now take place on 1 December 2008.
• However, as a result of the 2.5 per cent cut in VAT this December, the cost of petrol and diesel will fall for private motorists who should see no increase in the price they pay at the pump this year from this measure.
• The Pre-Budget report also confirms that, as pre-announced in Budget 2008, main fuel duties will further increase by 1.84 pence per litre on 1 April 2009; and 0.5 pence per litre above indexation on 1 April 2010.

As a result of falling oil prices, pump prices have now fallen by more than 20 pence per litre from their July peaks. The Pre-Budget Report therefore announces that the 2 pence per litre increase in fuel duty planned for 2008 will now take place on 1 December 2008.

However, as a result of the 2.5 per cent cut in VAT this December, the cost of petrol and diesel will fall for private motorists who should see no increase in the price they pay at the pump this year from this measure.

The Pre-Budget report also confirms that, as pre-announced in Budget 2008, main fuel duties will further increase by 1.84 pence per litre on 1 April 2009; and 0.5 pence per litre above indexation on 1 April 2010.

Excise Duty: The Pre-Budget Report announces that the 2 pence per litre increases in fuel duty planned for 2008 will now take place on 1st December 2008. The Pre-Budget Report also confirms that, as pre announced in Budget 2008, main fuel duties will further increase by 1.84 pence per litre on 1 April 2009; and 0.5 pence per litre above indexation on 1 April 2010.

In summary this means that as from midnight on Sunday next, fuel duty on petrol and diesel on all deliveries will increase by 2 pence per litre to 52.35 ppl.

Excise Duty will also be increased on LPG when this gas is used a road fuel; the new rate will be 10.385 pence per litre as from 1st December 2008.