To counteract the economic impact of the coronavirus pandemic, from the 15th of July 2020, the government offered a temporary VAT cut for UK businesses in specific industries.
The reduction allowed companies in the hospitality sector or those who operated particular accommodation or attractions to charge 5% VAT instead of the standard rate of 20%. However, to qualify, these companies had to have been through the VAT registration process with HMRC.
Eligible businesses can either pass these savings on to their clients to make their prices more competitive or use them to compensate for the deficit experienced after months of lockdowns.
However, from the 1st of October 2021 until the 31st March 2022, this rate will increase to 12.5%. Whether you use a
VAT Recovery solutionor not, this is good news for business travelers coming to the UK as you will be able to claim back more money on your travel expenses.
Below we will give the lowdown on the new rules and what savings business travelers benefit from with this new VAT rate. Plus, we share some tips for straightforward VAT recovery for busy travelers, finance, and travel managers. Let’s dive in!
- Circuses and fairs.
- Amusement parks.
- Studio or factory tours.
- Botanical gardens.
- Exhibitions and other cultural events.
- Ensure the new VAT rate is up to date on any accounting software and internal systems.
- If your business also sells goods such as alcohol that fall outside the scope of the reduced rate, you will need to conduct a few extra checks. Go through your systems to make sure you have not altered the VAT rate for these products and establish with your team how you will account for the sale of goods with different amounts of vat due.
- Decide whether you will pass on the savings to your customers and if you decide not to, double-check whether you are operating within the VAT rules in this regard.
- If you are going to pass on these savings, update your website, menus and other documentation with your prices and be sure to let your clients know they can enjoy these discounted rates until March 2022.
VAT solution, organizations can save up to 25% of their travel spend while reclaiming the VAT from trips in over 20 countries. Plus, with the most extensive travel inventory in the world, TravelPerk can provide business travelers with a wide range of VAT-ready accommodation options.
We help companies significantly reduce the amount of administration with our VAT-ready invoices and straightforward reporting. If you already use other apps to record expenses and handle your accounts, our solution can be integrated with ease to synchronize information across your systems seamlessly.