VAT RATES FOR HOSPITALITY SECTOR DUE TO INCREASE FROM 1 APRIL
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 […]
5% RATE ON TOURISM AND HOSPITALITY ENDS 30 SEPTEMBER
The temporary 5% VAT rate that has applied to supplies made in the tourism and hospitality sector since the start of the pandemic comes to an end at the end of September. The rate then increases to 12.5% from 1 October until 31 March 2022 when it reverts to the standard rate. For those businesses […]
MAKING TAX DIGITAL EXTENDED TO MORE BUSINESSES
Currently only VAT registered businesses making taxable supplies in excess of the £85,000 VAT registration threshold are mandated to comply with Making Tax Digital (MTD) rules. Those rules require the business to keep digital business records and send VAT returns using MTD-compatible software. MTD for VAT is now being rolled out to all VAT registered […]
VAT REGISTRATION LIMIT FROZEN AT £85,000 UNTIL 1 APRIL 2024
The VAT registration limit normally goes up each year in line with inflation but will remain at £85,000 for a further two years. Arguably this makes it easier for businesses to assess whether or not they are required to register for VAT as it is no longer a moving target.
5% VAT RATE FOR FOOD, ATTRACTIONS AND ACCOMMODATION EXTENDED
In order to continue to support businesses and jobs in the hospitality sector, the reduced 5% rate of VAT will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK until 30 September 2021. The 5% reduced rate of VAT will also continue to […]
VAT RULES FOR CONSTRUCTION SECTOR STARTED
The new “reverse charge” system of VAT accounting affects sub-contractors supplying their services to main contractors in the construction sector. Under the new rules, supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain are no longer invoiced in the normal way. Under the new reverse charge system, the sub-contractor does […]
NEW VAT RULES FOR CONSTRUCTION SECTOR START ON 1 MARCH 2021
New VAT rules are finally due to come into effect this March which will impact on accounting for VAT for transactions in the construction sector. These new rules, which were originally scheduled to start back in October 2019, have already been delayed twice as there was a lack of awareness of the changes in the […]
VAT DEFINITION OF “MOTOR CAR”
For VAT purposes the definition of a motor car has been amended several times over the years. The current definition states: “Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either: a) is constructed or adapted solely or mainly for the carriage of […]
MTD FOR VAT TO BE EXTENDED TO ALL VAT REGISTERED BUSINESSES IN 2022
Since 2019, the vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) have been mandated to keep digital VAT records and send returns using Making Tax Digital (MTD)-compatible software. From April 2022 these requirements will apply to all VAT-registered businesses. It has also been announced that MTD for Income Tax […]
INTERACTION WITH VAT FLAT RATE SCHEME
Small businesses with turnover below £150,000 may join the VAT flat rate scheme which makes their VAT accounting much simpler as they merely pay HMRC a percentage of their VAT inclusive turnover. The temporary reduction in the rate of VAT from 20% to 5% reduces the flat rate percentages for affected businesses as set out […]
