NOTE: The information below is based on current Government guidance and Sage expertise. This information is subject to change, we will continue to keep you up to date as more Government's guidance becomes available. You can also find out more at GOV.IE

What's changing?

On 23 July 2020, An Taoiseach, Micheál Martin announced the July Job Stimulus Package. This is a programme of initiatives and incentives designed to help businesses re-open, get people back to work and promote confidence.

• A 6-month lowering of the standard rate of VAT from 23% to 21%, effective from 1 September 2020 to 28 February 2021.
• To provide immediate cash-flow support to previously profitable companies, the early carry back of trading losses will be allowed, leading to an immediate refund of some or all of corporation tax paid.
• A new income tax relief for self-employed individuals who were profitable in 2019 but, as a result of the COVID-19 pandemic, incur losses in 2020.

Full details can be found here - GOV.IE Guidance

When are the changes happening?

The standard rate of VAT lowers from 23% to 21%, effective from 1 September 2020 to 28 February 2021.

How do I revert back to the 23% rate after the end of February in Sage 50 accounts?

Read more

What changes do I need to make in Sage 50 Accounts?

In Sage 50  Accounts you can edit and add tax codes in the software. You can create a new tax code to represent the temporary 21% VAT rate, which may mean it is simpler to identify transactions you're entering during this temporary reduced VAT rate period for reconciliation and analysis purposes. Read more >

Do I have to adjust my September VAT Return?

You shouldn't need to post any VAT Return adjustments specific to this VAT Rate change but this may depend on your individual business circumstances. From 1 September onwards you record relevant sales and purchases with the new tax codes.

What if I'm invoiced with the wrong VAT amount from my supplier?

For queries about the VAT rate used on purchase invoices, you should contact your supplier. If you don't get the invoice corrected then you should pay the amount of VAT invoiced. In addition, if you do get an incorrect invoice, you shouldn’t manually override the VAT when entering on the system and should make sure what’s invoiced is what’s reflected on your VAT return.

How do I know which VAT rate applies to a transaction?

The VAT rate to apply to a transaction depends on the tax point. If the tax point is on or after 1 September 2020, the new rate applies and if the tax point is before 1 September then the existing rate applies.

You can find details of how to determine the tax point of a transaction on Revenue.ie.

What if I have a sales invoice that includes sales before and after 1 September?

The VAT rate to apply to a transaction depends on the tax point. If the tax point is on or after 1 Septemeber 2020, the new rate applies and if the tax point is before 1 September then the existing rate applies. 

You can find details of how to determine the tax point of a transaction on Revenue.ie.

I've posted an invoice with the wrong tax code. How do I correct this?

To correct this, you could issue a credit note to cancel the incorrect invoice, then raise the invoice again with the correct tax code.

How do I record sales invoices issued before 1 September but paid on or after 1 September?

The VAT rate to apply to a transaction depends on the tax point. If the tax point is on or after 1 September, the new rate applies  and if the tax point is before 1 September then the existing rate applies.

You can find details of how to determine the tax point of a transaction on Revenue.ie.

How do I make changes in Sage 50 Accounts now that will make it easier when it reverts in February?

You can create a new tax code to represent the temporary 21% VAT rate, which may mean it is simpler to identify transactions you've entered during this temporary reduced VAT rate period for reconciliation and analysis purposes.

For full details, refer to our step-by-step guide.

What if I use AutoEntry?

Once you make the relevant changes detailed in our step-by-step guide, there are a few things to check in AutoEntry. 

For full details, please refer to the AutoEntry guide.

What if I use GoCardless?

Once you make the relevant changes detailed in our step-by-step guide, there are no additional actions needed for GoCardless.

What if I use Invoice Payments?

Once you make the relevant changes detailed in our step-by-step guide, there are no additional actions needed for GoCardless.

What if I use bank feeds rules?

We recommend you review any bank feeds rules you've set up and make any tax code changes if required.

What if I use Sage Capture and Approvals?

Once you make the relevant changes detailed in our step-by-step guide, there are no additional actions needed for Sage Capture and Approvals.

What if I use third party software to integrate with Sage 50 Accounts?

We recommend you speak to your third party software provider to find out if any changes are needed.

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