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VAT rate for the hospitality industry temporarily reduced to 5%

In the Chancellor’s summer statement, it was announced that the VAT rate for the hospitality industry would be reduced from 20% to 5% on a temporary basis from the 15th July 2020 to the 12th January 2021. This change has been brought in by the government in an effort to support businesses that have been severely affected by COVID-19.

 

Which types of business will the reduced VAT rate apply to?

The new VAT rate will apply to hotels, holiday accommodation, hospitality and admission to certain attractions such as zoos, theatres, cinemas, museums and amusement parks.

Hotels and travel companies

For hotels and travel companies, the 5% reduced rate applies to any sleeping accommodation that occurs in hotels, B&Bs, campsites and caravan sites. If 20% VAT on advanced bookings has already been accounted for, then the businesses has the option of applying the 5% rate and issuing a credit note as a refund to the customer. 

Pubs, restaurants, cafes and takeaway businesses 

For pubs, restaurants, cafes and takeaways offering hot food, the 5% reduced VAT rate will apply to food and non-alcoholic beverages sold on the premises. For takeaways, this will still apply to food and drink taken off the premises.  

However, there are some points to note for these types of business:

  • Cold drinks such as canned drinks will not be covered by the reduced rate.
  • Any private event that offers catering such as buffets or meals will not be eligible for the reduced rate.

For further guidance on this topic, you can read more on the HMRC website

 

Eat Out to Help Out scheme

 A new scheme has been introduced by the government to encourage people to eat out in restaurants, cafés and pubs. Diners will be able to claim a 50 per cent discount of up to £10 per head on any eat-in meal at any participating venue on a Monday, Tuesday or Wednesday during August 2020 (you cannot offer discounts before the 3rd August 2020). Alcoholic drinks are not included in the amount eligible for the discount. 

Companies will be reimbursed through an online scheme. To register your business or to find out more about the eligibility criteria and making a claim, just visit the government site.

 

If you need advice about VAT, get in contact with us and we will be happy to help.

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HMRC Self-Employment Income Support Opens on 13th May

The Self-Employment Income Support Scheme (SEISS) opens on the 13th of May 2020. This new scheme is designed to provide income support for self-employed workers who have been adversely affected by the coronavirus (COVID-19) outbreak. Read on to find out if you’re eligible, how much you could claim, and how to apply.

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UK Budget 2020: The Key Points

On 11th March 2020, Rishi Sunak announced the new UK budget. He presented several announcements that are set to affect businesses, the self-employed, and working families. Here is a summary of the main points from the latest budget.

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Planning for the New Tax Year

As we near the end of the tax year, it is important if you are self-employed to start planning for the new tax year. This guide explains when the tax year ends and provides a year-end tax planning checklist.

We have provided a summary for the main 2020/2021 tax year changes to help guide you through the main changes that will come in to force. Taking action at the start of the tax year may give you an advantage. Here’s what you need to know about the 2020/2021 tax year. 

What Is IR35 And When Does It Apply?

IR35 is a piece of legislation designed to counter tax avoidance. It is used to decide if contractors are actually contractors or are just disguised as an employee for tax purposes. This article will help you understand the IR35 legislation and provide tips on if it applies to you and how to be compliant.

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How to Complete a Self-Assessment Tax Return

A self-assessment tax return is the form used by HM Revenue and Customs (HMRC) to collect income tax from individuals. Whilst income tax is deducted from your salary automatically if you work for a company, most people who are self-employed must complete one each year.

This guide will explain who needs to complete a self-assessment tax return, when they’re due, and how to complete one (with a handy checklist).