8 March 2021
Businesses in the retail, hospitality and leisure sectors suffered more than others because of COVID-19. The key measures to help businesses include extension to the VAT cut to 5% and new Restart Grants up to £18,000.
Reduced VAT rate for hospitality, holiday accommodation and attractions
Businesses in the retail, hospitality and leisure sectors will benefit from the extension of the 5% VAT rate for these sectors for an additional six months up to the end of September 2021. First of all, the government took this step to quickly restore business in these sectors in the summer of 2021, which is the main season for this sector.
Reduced rates of SDLT will apply until 31 March 2022 inclusive (with two different stages: from 8 July 2020 until 30 September 2021 and from 1 October 2021 to 31 March 2022). On the 1 April 2022 the reduced rates shown in the following schedules will revert to the rates of SDLT that were in place prior to 8 July 2020.
Rates for hospitality, holiday accommodation and attractions
Rate | VAT rate |
Standard rate | 20% |
Rates from 8 July 2020 until 30 June 2021 | 5% |
Rates from 1 July 2021 to 30 September 2021 | 12,5% |
The supplies to which the temporary reduced rates will apply remain the same.
Limitations in different fields
Rate reduction does not apply to all cases and is limited by certain conditions. For example, in the field of Hospitality you’re currently required to charge reduced VAT of 5%, if you supply food and non-alcoholic beverages for consumption on your premises, i.e in a restaurant, pub, café. Besides this, you can use the reduced rates rate of VAT on your supplies of hot takeaway food and hot takeaway non-alcoholic drinks. However, this temporarily benefit from the reduced rate and which do not include any supplies of alcoholic beverages.
In the area of hotel and holiday accommodation the businesses can benefit from the temporary reduced rate in the following cases: charge fees for caravan pitches and related facilities; supply sleeping accommodation in a hotel, hostels or similar establishment; charge fees for tent pitches or camping facilities; make certain supplies of holiday accommodation.
Regarding certain attractions the businesses are limited by the following cases: admission fees to shows; theatres; circuses; fairs; amusement parks; concerts; museums; zoos; cinemas; exhibitions; similar cultural events and facilities; planetarium; botanical gardens; studio and factory tours.
However, admission to sporting events is excluded from the temporary reduced rate provisions. This temporary reduced rate is limited only by admission fees. But if goods are part of the admission fee and are incidental to the main supply, the whole supply is eligible for the temporary reduced rates.
Restart Grant for small business
The Government has announced a £5,000,000,000 Restart Grant scheme to help any small business affected by Coronavirus.
According to this new support measure retail businesses which will open first will receive grants of up to £6,000 per premises. Shops will reopen no earlier than April 12, 2021. Also hospitality and leisure businesses, including personal care and gyms should open later and they are more impacted by restrictions. Therefore, these businesses will be given grants of up to £18,000.
Who is eligible for the support measure?
The business may be eligible for a Restart Grant if it meets the following criteria: the business is based in the UK; the business has been required to close for at least 14 days because of the restrictions; the UK business has been unable to provide its usual in-person customer service from its premises this business occupies property on which it pays business rates; this business is the ratepayer.
How to apply for Restart Grant?
The Restart Grant is provided by local authority. The UK Government will provide support until 21 June 2021.
Summary
Thus, with new reduced rates and grants the government continues to support the retail, hospitality and leisure sectors in connection with the problems caused by the pandemic COVID-19. Such reduced rates and grants should help the businesses to recover quickly after a long break due to coronavirus.
For further information on any of the points above contact
Mikita Makayou at mikita@lexefiscal.com, or
Dr. Frank at clifford.frank@lexefiscal.com.