If you are running or managing businesses within hospitality sector, this is very important information affecting your business from 01 October 2021.
- Hotels, restaurants and bars
- Food and drink service
- Event planning
- Theme parks
- Travel and tourism
In July 2020, during the Covid-19 pandemic period, the Government reduced the Standard VAT rate from 20% to 5% and it was supposed to revert back to 20% on 31 January 2021. When the lockdown was extended this date was moved to 30 September 2021.
From 01 October 2021 these are the changes:
- The standard rate of VAT is 12.5% until 31 March 2022.
- To separate VAT from the gross amount use the fraction 1/9
- For example, if you charge someone £27 for a meal, the VAT will be £27 divided by 9 = £3 VAT and £25 net amount.
- From 01 April 2022 normal VAT rules will apply for example 0%, 5% and 20%
For Credit notes raised after 01 October 2021, please use the same rate of the invoice raised. If you need to read further please refer to VAT Notice 700, para 18.2.5.
Flat rate scheme (FRS) – new percentage rates from 01 October 2021
- Catering services including restaurants and takeaways: 4.5% will increase to 8.5%
- Hotel or accommodation: 0% will increase to 5.5%
- Pubs: 1% will increase to 4%
These are the points you should action internally:
- Till, Epos & Cash register for reflecting correct VAT rate
- Book-keeping software
- Invoice templates, spreadsheet, etc.
- Pre-printed invoice book
- Inform the staff
- Update record keeping
For more assistance on this matter contact Sterling Finance and we will be able to help. Our contact details are:
Sterling Finance UK Limited
Website : www.sterlingfinance.net
Email : email@example.com
Tel : 0161 339 4989