TOMS Changes Post Brexit

If you are on our mailing list, you might have received our TOMS Changes Post Brexit summary a few weeks ago. For those who are not on our mailing list, you can read our initial summary and key points below.

We are now drawing closer to final confirmation of the proposed revisions to the UK TOMS regime post-Brexit. This has not yet been finalised by HMRC but has been agreed in principle and we now have permission to share the expected changes with you.

In summary, these changes are as follows:

  • TOMS will still apply to the same types of services but, crucially only the margin made on UK travel will be subject to the standard rate of VAT for departures on or after 1 January 2021. The margin made on non-UK services will be zero rated.
  • For those selling non-UK travel only, this should mean that no UK output VAT is payable on services departing on or after 1 January 2021 because the full margin will be zero rated. This is likely to mean a VAT repayment position each quarter for many outbound tour operators.
  • In this coming year, there will be transitional provisions in place for businesses with financial years spanning 31 December, and optional changes to provisional percentages for all businesses.
  • For those selling UK travel, the position will not change drastically. However, there may be some benefits such as a possible reduction in transport company administration and the possible allowance of the temporary reduced rate on accommodation etc. within the TOMS calculation. We are still waiting for confirmation from HMRC on these points. 
  • There is a possibility that transport companies will be removed and replaced with an allowance within the TOMS calculation – the “pre-1996 rules”.
  • The TOMS calculation format and “life-cycle” will still be the same.
  • Those selling services which include a mix of TOMS and non-TOMS (in-house services) will still need to perform a TOMS calculation, even if the travel is non-UK only. This is because the value of the service will still need to be split between TOMS and in-house in order to ensure the correct VAT accounting on both elements.
  • There will be risks and opportunities for both UK and non-UK travel operators and we have included some of these in more detail in the link below.

Do You Need More Advice on How the Changes Affect Your Business?
We hope that this information will help answer some initial general queries. Please note that this is not a substitute for specific advice for your business, and we would always advise that you take VAT advice fully for your circumstances to ensure you minimise risks and maximise opportunities with VAT. As we would like to help as many businesses as possible, we are offering Brexit VAT consultations with Laura by Zoom or telephone at a discount between now and 31 January 2021. A consultation of 45 mins will be £150 excl. VAT.
Book with Laura directly by contacting her at

Disclaimer: This was correct at the time of initial publishing (27/11/2020) and is subject to change based on further updates and HMRC developments. In addition, please note that this is for information purposes only and is not a substitute for advice specific to your circumstances. As such, please check with a VAT advisor before acting on any information within this email or linked PDF. We are always happy to provide detailed advice to you.

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