Value added tax may be one of the least glamorous types of tax, but there have been a few recent announcements that certainly make it a little more interesting. From coronavirus business support measures, to MTD changes, here’s a brief summary of the latest VAT updates.
5% VAT rate for food, attractions and accommodation extended
As announced in the Budget 2021, 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 apply to supplies of accommodation and admission to attractions across the UK.
From 1 October until 31 March 2022 the rate will be set at 12.5% and will then revert to 20% from 1 April 2022.
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.
Making Tax Digital extended to all VAT registered businesses from 1 April 2022
The government has confirmed that the requirement to maintain accounting records in a digital format and submit the data to HMRC electronically will be extended to all VAT registered businesses from 1 April 2022 regardless of the level of taxable supplies.
If your turnover surpasses the £85,000 threshold and you’re yet to register your business for VAT, get in touch to discuss your options and get some independent, impartial advice.