Jenna McArtney
Small businesses with turnover below £150,000 may join the VAT flat rate scheme which makes their VAT accounting much simpler as they pay HMRC a percentage of their VAT inclusive turnover.
The temporary reduction in the rate of VAT from 20% to 5% reduces the flat rate percentages for affected businesses as set out below:
Catering services: 4.5 from 15 July 20 to 12 Jan 2021 then 12.5 from 13 January 2021
Hotel or accommodation: 0 from 15 July 20 to 12 Jan 2021 then 10.5 from 13 January 2021
Pubs: 1 from 15 July 20 to 12 Jan 2021 then 6.5 from 13 January 2021
Note that to use the flat rate percentage for pubs the turnover must be predominantly ‘wet sales’.