This article will explain the new VAT rate changes for the hospitality, holiday accommodation and attractions industry. Plus, instructions on how you can turn these tax rates on or off in QuickBooks Online.
In July 2020, a temporary 5% reduced VAT rate was introduced for certain supplies within the hospitality sector. The rate was initially meant to last for a temporary period between 15 July 2020 and 12 January 2021.
The government announced at this year’s Budget 2021 that it will be extending the 5% reduced rate once again until 30 September 2021.
A new 12.5% reduced rate will be introduced on 1 October 2021, and will apply for another six months until 31 March 2022. The normal 20% standard VAT rate will be reinstated on 1 April 2022. Here's a summary of the timelines and changes so far:
|From 8 July 2020 to 30 September, 2021||5%|
|From 1 October 2021 to 31 March, 2022||12.5%|
|From 1 April 2022||20%|
What do I need to do?
The 12.5% tax rate is already available in QuickBooks. All you need to do is turn this on.
Check out this article if you want to learn more about the different types of VAT codes. Or read setup and edit VAT settings and codes. If you're using QuickBooks Desktop, here's how you can create the new tax rate.
You can find more detailed information on the upcoming VAT rate changes here.