Baxter&Co - 2021 Spring Business Support Guide

3 VAT reduced rate The 5% VAT rate for hospitality has been extended until 30 September 2021. On 1 October 2021 it will increase to 12.5%, before reverting to the normal 20% rate from 1 April 2022. The following are eligible for these reduced rates: • food and non-alcoholic beverages sold for on-premises consumption, for example in restaurants, cafesand pubs • hot takeaway food and hot takeaway non-alcoholic beverages • sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans or tents and associatedfacilities • admissions to the following attractions, if they are not already eligible for the ‘cultural’ VATexemption: • theatres, concerts, cinemas • circuses, fairs, amusement parks, zoos • museums, exhibitions • similar cultural events and facilities Note that alcoholic drinks remain chargeable at 20% throughout. If you operate a business where some of your sales are eligible for the reduced rates, you are not obliged to pass on this VAT cut to customers. This means that you can keep your gross prices the same and use the tax break toincrease profit margins if you feel your prices will still be competitive. Often, when a tax rate is due to go up, there are ‘anti- forestalling’ rules to stop customers benefitting from the reduced rate by paying in advancefor facilities that they will enjoy once the rate has gone up. However, HMRC has stated that there are no plans to introduce any anti-forestalling rules before the VAT increases take place. This means that a customer can, for example, pay for holiday accommodation in September 2021 that will not be used until April 2022, but only pay 5% VAT. Dealing with changing VAT rates produces various complications for businesses, including updating tills and making sure VAT returns contain correctfigures. If things go wrong it can lead to extra VAT and penalties being due. We can help you avoid such problems, so talk to us if you have any concerns about the changes. Coronavirus support measures Recovery loan scheme In the Budget, the Chancellor announceda new ‘Recovery Loan Scheme’. This will provide lenders with a Government guarantee of 80% on eligible loans between £25,000 and £10 million. This scheme is now open to all businesses, including those who have already received support under the existing COVID-19 loan schemes. Business rates relief and ‘re-start grants’ Eligible retail, hospitality, leisure and nursery properties in England enjoyed 100% business rates relief in 2020/21. This has been extended to 30 June 2021,after which there will be a further 66% relief for the period to 31 March 2022 (subject to conditions and limits). Re-start grants have been announced, as follows: • Non-essential retail businesses canclaim up to £6,000 per premises • Hospitality, accommodation, leisure,personal care and gym businesses can claim up to £18,000 per premises as they reopen after the present lockdown The Government is also providing £425 million to local authorities to use for discretionary grants to businesses. The devolved authorities have their own measures to provide similar support.