COVID-19 – VAT Changes & Furlough Update
The VAT rate on food, non-alcoholic beverages, bar snacks and accommodation was reduced to 5% in July 2020 as part of the government’s rescue package to help businesses during the Covid19 pandemic.
As of the 1st October 2021, VAT rates on Food, Drink & Accommodation will increase from 5% to 12.5%.
The Finance Act 2021 includes clauses to increase the rate to 12.5% between 1 October 2021 and 31 March 2022, with the standard rate of 20% to return from 1 April 2022.
These clauses can however be amended by Treasury Regulation should the Chancellor decide to extend the rate reduction.
Fairmile Accounting are aware of these changes – You don’t need to do anything differently, just ensure you are recording food and non-alcoholic drinks separately.
Please also ensure that your till systems are updated so that the correct VAT rates are reflected on receipts.
At the last budget, the Government expected the economy to have adequately recovered by the end of September and announced the end of the furlough scheme on 30th September 2021.
The final month of the scheme allows claims of up to 60% of the employee’s usual pay with a cap at £1,875 and must be submitted by 14th October 2021.
Need further help or advice? – Contact us here!
*Please note that we cannot provide HR advice