Paul Crichton
Early in the COVID-19 pandemic, the Chancellor reduced the rates of VAT for the leisure and hospitality sector to just 5%. That reduced rate applied from 15 July 2020 until 30 September 2021 when the rate was increased to the current 12.5%. However, the rate is scheduled to revert to the normal 20% rate from 1 April 2022.
The businesses affected by the temporary rate reduction are those
- supplying catering services including restaurants and takeaways
- operating hotels and providing holiday accommodation and
- operating leisure attractions such as zoos and theme parks
Businesses should listen to the Chancellor’s Spring Statement on 23 March in case he announces an extension of the 12.5% rate.
If there is a change announced on 23 March, there will only be a limited amount of time to implement changes to prices and VAT accounting.
For businesses using the VAT Flat Rate Scheme, the flat rate percentages will revert to the pre-15 July 2020 amounts if the VAT rate reverts to 20% from 1 April 2022.