On 8 July 2020 the government announced it would introduce a temporary reduced VAT rate of 5% to certain supplies relating to hospitality, hotel and holiday accommodation and admission to certain attractions.
The reduced rate was intended to help hospitality and hotel businesses through difficult trading conditions as a result of the Covid-19 pandemic. The reduced VAT rate was introduced on 15th July 2020 and was originally intended to be applicable until 12 January 2021. This period was subsequently extended to 31st March 2021, and Budget 2021 then extended this temporary VAT rate cut until 30th September 2021.
From 1st October 2021, the new Standard VAT rate applicable to these sectors will be 12.5%, which will be in force until 31st March 2022. From 1st April 2022 it is intended that the VAT rate will then revert to 20%.
This change also affects those companies that operate under the Flat Rate Scheme as the VAT Rate will rise to 8.5% on the 1st October 2021. From 1st April 2022 this will then return to the pre-pandemic rate of 12.5%.
If your business is affected by these changes and you are concerned about the impact on your cashflow, NR Barton can offer market leading financial forecasting software to provide live, real time forecasts of the impact this VAT rate change will have on your business cashflow to enable you to make proactive decisions to protect the financial health of your business.
Please contact your Manager/Partner for further information.
Adrian Farrimond – Director