Yesterday Chancellor Rishi Sunak announced that there would be reduction in VAT for businesses. In the tourism and hospitality industries (although alcohol sales are excluded). The reduction from 20% to 5% will come into effect from Wednesday 15th July and remain until 12th January ‘21.
VAT is the tax collected by businesses on the items and services they sell and it’s then passed the HMRC. Therefore, the reduction in VAT should mean a reduction in the price that consumers pay for these good & services.
Alcoholic beverages are excluded from this VAT cut. However, it will apply to things like all food and (non-alcoholic) drinks from restaurants, pubs, and bars. To takeaways; cinemas; zoos; accommodation; the admission price for attractions, and cafés etc. throughout the UK.
This tax cut is expected to save households around £160 a year on average if businesses pass it on in full. However, this does rely on businesses passing these savings on to customers.
If you’re in the tourism or hospitality industries and would like some help adjusting your accounting processes to the new VAT rate, get in touch
How can you get in contact with us?
Need more information on VAT? Visit the Gov.uk site here.