Rob provides a summary of today’s announcements in relation to VAT.
Extension of Reduced Rate for the Hospitality and Tourism Sector
The Government have extended the targeted VAT support for the hospitality sector, meaning that the reduced rate of VAT (5%) for goods and services supplied by the Tourism and Hospitality Sectors is extended to 30 September 2021, wherefrom a transitional rate of 12.5% will apply for the subsequent six months until 31 March 2022. It is anticipated that the rate will return to the full (standard) rate of VAT (20%) thereafter.
VAT Registration thresholds frozen
It was also confirmed that the Registration Thresholds (£85,000) for VAT will not change until 1 April 2024 at the earliest, giving businesses certainty over registration requirements for some time to come.
VAT deferred payments
This is not new news in the budget today, but a timely reminder that any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced.
There is also set to be a reform of the penalties for late payment and submission of VAT returns to take effect from 1 April 2022 to ensure it is more consistent with other taxes.