vat flat rate scheme Advantax Accountants

The Reduced Rate of VAT to End on 1 April 2022

The government originally announced a temporary discount rate for the hospitality industry in July 2020 as one of several measures designed to help certain business units during a pandemic.

With further announcements, the VAT rate of 5% has been extended to 12.5% ​​for a period on 1 October 2021 and then back to 20% on 1 April 2022. The latest autumn budget provided further support to the hospitality sector by maintaining the rate of 12%. 5% or return to 5% indefinitely. However, such a proposal has not been announced in the budget, and the VAT rate will, as planned, return to 20% on 1 April 2022.

The VAT rate of 12.5% ​​is temporarily applied to the following consumer goods.

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Catering supplies are currently subject to a 12.5% ​​VAT rate. Temporary discounts include food and non-alcoholic beverages, hot takeaway food, and hot takeaway beverages. Cold takeaway food will continue to be subject to 20% VAT or 0% VAT according to existing rules.

Types of facilities for which the reduced price applies: Discounted prices apply to eligible supplies made in restaurants, pubs, cafes, and similar facilities.

Holiday Accommodation

Consumer goods are currently subject to a VAT rate of 12.5%. Stays in hotels and boarding houses, holiday homes with self-catering, caravan stays, caravan rental, pitch prices.

Impact of the Received Payments and Prepaid VAT Invoices:

Upon receipt of a deposit, for payments made for VAT purposes and received before October 1, 2021, a VAT rate of 5% will be applied to this deposit. If you receive a deposit between 1 October 2021 and 1 April 2022, a VAT rate of 12.5% ​​applies.

Issuing a valid VAT invoice that includes the full amount to be paid creates the full delivery time for the delivery. If you issue a VAT invoice before your stay begins on April 1, 2022, or later, you will be able to apply a VAT rate of 12.5%.


Access to a Specific Attraction

The Nature of the Supply to Which a VAT Rate Of 12.5% ​​Is Currently Applied:

Access to shows, plays, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, and exhibitions. Temporary discounts do not apply to admission, which is normally exempt from VAT under existing cultural tax exemptions. Such a recording will therefore continue to be VAT-exempt.

Other Goods or Services Offered

If the admission fee includes the supply of other ancillary or ancillary goods or services (pamphlets, travel guides, activity books, etc.), the entire supply is subject to a temporary discount. Guidance from HM Revenue and Customs is an example that if the admission fee for the brewery trip example is the result of the overall supply of food and drink, the admission fee may not be eligible for a temporary discount. Offers.

If you charge extra for food and drink consumed on the premises of the attraction, you should consider whether a temporary hospitality discount is also available.

VAT Savings for Customers

For customers who are unable to fully refund VAT, VAT will continue to be subject to a 5% or 12.5% ​​tax rate if prepaid for some hospitality services prior to October 1, 2021. This is practical. .. Create tax points.

This will only benefit you if the delivery is announced excluding VAT and the VAT added to your invoice is temporarily discounted. Otherwise, VAT savings will be retained by the supplier.

Fixed VAT Rate (FRS)

When the one-time discount was introduced in July 2020, fixed prices in many hospitality-related categories were reduced. As a result, many companies, especially those with relatively low VAT sales of 5% and low sales of 20%, are leaving FRS.

FRS pricing will be adjusted as follows from October 1st, so it is recommended that these companies consider re-entering the scheme in October or April.

  • Catering services including restaurants and takeaways-4.5% will increase to 8.5%.
  • Hotel or accommodation-0% will increase to 5.5%.
  • Pub-1% goes up to 4%.

After that, prices will rise again from April 1, 2022, to pre-July 2020 levels. If you are affected by the VAT rate change from October 1, 2021, and would like to discuss practical questions or opportunities to use VAT, please contact us at 02085718826.