VAT cut to be extended for the hospitality sector and VAT deferral scheme support

On 24 September 2020 the government’s Winter Economy Plan announcement included an extension to the temporary VAT rate of 5% for the hospitality and tourism sectors. The 5% rate was due to end mid January 2021 and has been extended to 31 March 2021. This is welcome news for the struggling sector.

The chancellor also announced further help for those who chose to take advantage of the VAT deferral scheme for VAT payments due between March and June this year. Repayments of deferred VAT were due to be repaid by 31 March 2021. The latest news means that any outstanding amounts can be paid in instalments over 11 months during 2021/22. Businesses will need to opt in and details of how to opt in will be issued in early 2021. Again, this offers businesses a much needed cash flow boost.