From 1 October, the VAT rate is to be increased to 12.5% for hospitality, holiday accommodations and attractions businesses as part of the Chancellor’s plan to bring the sector back from the pandemic.
This will stay in place until 31 March 2022, then from 1 April affected businesses are to return to the standard rate of 20%*.
The new rate replaces the current temporarily reduced rate of 5%, introduced on 8 July 2020, which was put in place to encourage customers back to the sector following the COVID-19 lockdown.
Those affected by the change include VAT registered businesses in the hospitality or holiday accommodation sector, including cafes, restaurants, pubs and hotels, as well as attractions such as shows and theme parks.
Pauline Green, head of product compliance at QuickBooks, says: “For many businesses in the hospitality sector, particularly small businesses, the rate hike signals a new host of changes to be navigated.”
QuickBooks has put together a checklist of the top 9 things for small hospitality businesses to consider, to help them prepare ahead of the 1 October deadline. These include:
- Making sure any changes to prices and systems are communicated to all the staff who will be using them.
- Checking prices and VAT rates are listed online within website content
- If admission fees are changing, checking where they are displayed
- When it comes to ticket prices, making changes that might be needed to both printed and e-tickets
- If pitch fees are changing, checking where they are displayed
- Checking with the Electronic Point of Sale (EPOS) system provider that the new rate will be available in time and what needs to be done to activate it
- If bridging software or other applications are used within the bookkeeping and accounting process, checking that they’ve been updated with the new rate
- For restaurants and other venues with catering,making sure menus and price lists are updated – are prices changing and is the correct VAT rate and amount displayed to customers?
- For accommodation businesses, considering accommodation packages - are there third-party vendors or partners who need to be made aware of any changes?