12.5% Reduced VAT Rate

From 1st October 2021, there will be a new tapered VAT rate of 12.5% applicable for businesses engaged in hospitality, hotel, and holiday accommodation. These sectors have been heavily impacted by Covid-19 and have faced most of 2020 and the start of 2021 in lockdown or with extremely subdued demand due to government restrictions.

To encourage an upsurge in demand for the sector, the government introduced a new temporary rate of 5% VAT from 8 July 2020 onward when restrictions were initially lifted in summer 2020.  The temporary rate was initially meant to last between 15 July 2020 and 12 January 2021. However, this was extended to 30 Sept 2021 as a result of additional restrictions being introduced by the government in January 2021 with extended lockdowns resulting from new variants.

The tapered rate of 12.5% will be applicable from 1st October 2021 and will last until 31 March 2022 to ameliorate the recovery of hospitality and holiday accommodation. Given that restrictions have been lifted since July and businesses as well as the high street have been open again, many have witnessed pent-up demand which has facilitated their recovery following months of negligible or below average turnover.

Are your accountants supporting you by keeping you up to date on the latest financial and tax related announcements made by the government? Is your business well placed to take advantage of the opportunities on hand and bounce back stronger from the pandemic? No matter whether your business is still in the survival, recovery, or growth phase, let Cheylesmore Accountants support your business’s journey by keeping you up to date on the most relevant and useful insights and updates from all aspects of the business, whether it be controls, taxation or advisory. Get in touch with us by arranging a call or booking a meeting through our website.