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VAT to 15%. We’re ready.

Posted 9 years ago in Xero news by xero
Posted by xero

It’s great to see Governments can act quickly when they want to.  The UK Chancellor has just announced that VAT will be cut from 17.5% to 15% effective from 1 December 2008 as an early Christmas present for consumers in the United Kingdom.

The main component is the well-trailed cut in VAT from 17.5 per cent to 15 per cent from Monday, which will expire in 2010. It is the first time that standard VAT has been cut across the board since it was introduced in 1973.

To support this change, we’ll be adding support for 15% VAT from 1 December 2008. To make the change smoother for users, we will leave the existing default tax rates and allow users to manually choose the 15% rate.

If you want to make 15% your default from 1 December, you can update your chart of accounts and change the default tax code. You might also want to check any repeat invoices that you have and change their tax rates to the 15%.

It’s not just a Christmas present for UK consumers of course …


November 25, 2008 at 3.08 pm

The beauty of online delivery – compliance changes can be made available to the installed user base without the need for downloading patches and expecting users to succesfully apply them!

Great Work

You Want Nimble? - SaaS Delivers It | CloudAve
November 25, 2008 at 7.34 pm

[…] so in the SaaS world – already Saasu and Xero have proudly claimed they’re all ready for the changes. No doubt other affected SaaS offering are […]

VAT: some late nights ahead for software vendors | AccMan
November 25, 2008 at 7.53 pm

[…] UPDATE: Xero’s ready. […]

November 27, 2008 at 7.18 pm

Naiive me is not really understanding why it’s manually activated and not automatic?

Rod Drury Xero
November 27, 2008 at 10.45 pm

Hi Tim, many accounting systems allow you to set your own tax rates. Our global version will do that.

But that is stuff that business owners don’t really understand so we remove complexity by setting the appropriate tax rates for each country.

Tax rates don’t normally change much, so this is a surprising change. Essentially all we have to do is add some new entries in our database and 15% VAT is supported for our UK customers.

I guess this is Service part of Software as a Service. We can look after this stuff for our customers so they don’t have to be tax or accounting experts.

So for our customers it’s automatic.

Hope that makes sense.


November 28, 2008 at 12.30 pm


Of course, both the 17.5% and 15% rates will be needed immediately after Dec 1st too for purchase invoices notably and any sales invoices that may need backdating…?

Same at the end of the year too?

Hope so
Anth Finegan ACMA

Rod Drury Xero
November 28, 2008 at 2.55 pm

@Anth, yes that’s correct. Both rates will be there.

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