In the budget this year the Chancellor Rishi Sunak, announced some upcoming VAT changes that you should know about as they could well end up affecting your business and costs either for procurement and/or in sales. Particularly if you’re in the hospitality sector.
Already this year we have seen big changes in relation to making tax digital. And since the 1st of April this year, all businesses should be accounting for their tax digitally including running a concurrent VAT report.
We have also seen the repayments of deferred VAT be delayed by the UK Government which allows those who are eligible to spread their repayments over interest-free instalments.
Next up, on the 1st of July, we saw a reform in how the EU see VAT in terms of e-commerce. With a change being introduced for how VAT is accounted for on cross border supplies between the EU and UK. The main reason for this change was to allow businesses here in the UK to account for local VAT.
The next of the VAT changes comes in the form of the end of the reduced rate of VAT for the hospitality industry. The current 5% reduced rate which was introduced to help businesses who were struggling to trade properly due to social distancing measures will end on 30 September 2021. After then there will be a transitional rate of 12.5% which will stay in place until it reverts back on 1st April 2022.
Other potential VAT changes that could come into play that haven’t yet include the potential of an online sales tax being introduced which would hopefully help in levelling the tax playing field between those who exist and trade solely online and those who trade in-person and on the high street.
If you want to know more about how the upcoming changes affect your business and how to prepare for when they are introduced, get in touch. Here at D&K Accounting, we are a team of Profit First professionals with years of experience in helping businesses across the country grow and look after their finances.