To encourage spending in the leisure & tourism sector, the VAT rate for certain supplies was cut from 20% to 5% in July 2020. From 1 October 2021, the VAT rate will rise again to 12.5% and this rate will be in place until 31 March 2022.
If your business operates in the leisure & hospitality sector, you will need to ensure that your accounting software is prepared for the change.
To add a new tax rate in Xero:
- In the Accounting menu, select Advanced, then click Tax rates.
- Click New Tax Rate.
- Enter a display name and select a tax type.
- Add the tax component name and enter the VAT percentage.
- Click Save.
To add a new tax rate in Quickbooks:
- From the left menu, select Taxes. Then, choose VAT. If you have multiple tax agencies, in the top-left ensure that the correct tax agency is selected.
- In the top right-hand corner next to Add tax, select the Edit VAT drop-down then Edit rates.
- In the tax rate table, choose the rate you want to change and select Edit.
- In the Edit tax rate window, change the rate. You can also change the name if you like.
- Set the Effective date, if required, this will be the date from which the rate change will take effect.
- Choose Save.
- Select On or Off beside the tax rate you want to make active or inactive.
- To confirm your changes select Yes.
If you have any questions about how the changes to the leisure & hospitality VAT rate may impact you, please get in touch with your usual Whitings LLP contact.