As part of the UK’s plan to recover from COVID, Chancellor Rishi Sunak, has set out the plan for Phase II with the ‘Plan for Jobs’. One part of the plan to protect jobs resulted in the rate of VAT applied on most tourism and hospitality-related activities being cut from Standard Rate of 20% to Reduced Rate of 5%. This will save households around £160 per year on average and, together with the Eat Out to Help Out Scheme, will support over 2.4 million staff at over 150,000 businesses, helping them recover and reopen after the Covid-19 lockdown. This will give these businesses the confidence to maintain their staff, as more people get through the door and business activity kick-starts again.
QuickBooks already has the Reduced rate of 5% included, but you may need to make the VAT rate active.
- From the left menu, select Taxes.
- Select Edit VAT, then choose Edit Rates.
- Select the Smaller Gear icon above the tax rates, and select Include Inactive.
- Find the tax rate you want to activate, then switch it from Off to On.
- Select Yes.
To deactivate the tax code, select the gear icon above the Action tab in Edit Rates, then pick the tax code you want to deactivate, then switch it to off.
“Eat Out to Help Out” scheme
You can use the Eat Out to Help Out Scheme to offer a discount to diners and encourage them to eat at your restaurant.
You can use the Eat Out to Help Out Scheme:
- All day, every Monday, Tuesday and Wednesday from 3 to 31 August 2020
- To offer a 50% discount, up to a maximum of £10 per person, to diners for food or non-alcoholic drinks to eat or drink in
- To claim the money back from the government
There is no limit to the number of times customers can use the offer during the period of the scheme. Your customers cannot get a discount for someone who is not eating or drinking.
Alcohol and service charges are excluded from the offer.
Registration will close on 31 August.
In your Chart of Accounts, create a new income account. We suggest naming it Eat out to Help out. Once the fields have been appropriately completed, select Save and Close.
- Create a new Non-Stock Product or Service. You can name it Eat out to Help out.
- In the account field, enter the income account you created in Step 1.
- When you make a sale, create a Sales Receipt and add the lines to the sales receipt as you would normally with the appropriate VAT code.
- Add an extra line for the scheme, by selecting the product/service created in Step 2 and enter the negative amount in the amount field. In the VAT column select No VAT. Once completed, select Save.
To identify the amount HMRC will refund you, you can run a report on the account created in Step 1. To run the report:
- Go to the Chart of Accounts > Find the account > Select the drop down arrow > Account Quickreport
- Once you receive the money back from HMRC, go to create a Bank Deposit. In the bank deposit screen, make sure you have the correct bank account selected at the top of the screen.
- On the deposit line, select the income account created in Step 1 earlier under the distribution account column and enter the amount refunded to you.
- Once completed, select Save.