VAT reduction & pricing
October 1, 2020
As part of the Government’s July Stimulus Package, the standard rate of VAT has been reduced from 23% to 21%, effective from 1 September 2020 until 28 February 2021. This reduction applies to a wide range of goods and services including, for example, cars, adult clothes, alcohol, electrical goods, most household goods, professional services, telecommunications etc
As a result of the temporary VAT reduction, many businesses have reviewed their prices and many have passed the savings from the VAT reduction on to consumers. However, it is important to note that businesses are not obliged to pass on the VAT saving and are free to set and review their prices at any time.
Regardless of whether they decide to raise, reduce or maintain their prices, under the law, businesses must still abide by a number of rules about how they display their prices to consumers.
In general, businesses must display the selling price (inclusive of VAT) of every item they offer for sale. For particular products, such as fruit and vegetables, businesses also have to show the unit price, for example, the price per kilogram, or price per litre.
This gives consumers more information and makes it easier to compare prices.
In addition, certain types of business have more specific and detailed obligations relating to price displays. These businesses include:
These businesses must display prices in a particular way so that consumers can easily compare prices before they have committed to spending money there.
Businesses who have adjusted their prices based on the VAT reduction must make sure that the price they display is the total price.Return to News