There will be a 6 month reduction in the standard VAT rate from 23% to 21% effective from 1st September 2020. This will help businesses who cannot reclaim vat, or are not VAT registered, by a reduction on their costs, but for others it will merely be a cash flow saving, UNLESS the business maintains its selling price, and thus retains the additional 2% as profit for themselves.

If business do reduce their prices by 2%, the hope is that this will increase personal spending and stimulate demand on consumer goods, and thus aid the economic recovery.