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Is your business affected by the increase to the reduced hospitality VAT rate?

Sage 50 Accounts

Summary – Reduced hospitality VAT rate

On 1 April 2022, the temporary UK VAT rate of 12.5% for the hospitality sector reverts back to 20%.

If your business is affected, you’ll need to revert to the standard rate VAT.

What do I need to do?

You probably created a new tax code for the temporary reduced VAT rate when it was introduced. If that’s the case, from 1 April 2022 you simply need to stop using the reduced rate tax code and revert back to your original standard rate tax code, for example, T1.

NOTE: Check for any recurring, memorised or outstanding items that need to be updated.

Didn’t create a new reduced rate tax code?

If you didn’t create a temporary tax code and instead amended the rate on your standard tax code, it’s recommend you now create a new tax code to use as your 20% standard rate going forward.

It’s recommend using T11 or, if T11 is already in use, the next available tax code not being used.

  1. On the menu bar, click Settings, click Configuration then click Tax Codes.
  2. Select tax code T11 or the next available code and click Edit.
  3. Complete the Edit tax code window as follows:
  • Rate – Enter the required percentage of 20%
  • Include in VAT Return – To ensure the transactions are picked up by the VAT Return, select this check box.
  • Reverse Charge – Leave as “No”.
  • EC Code settings – Leave the check box.
  • EC Code settings – Leave the check box unticked.
  • Description – Enter this description: Standard VAT Rate April 2022.

4. Click OK, then click OK.

Sage 50cloud Accounts v26 or below – Click OK, click Apply then click Close. If prompted to save the changes click No.

Your new tax code is now ready to use from 1 April 2022. Next you can check for any recurring, memorised or outstanding items that need to be updated.

Further Information

If you have any questions about this or need assistance, then please contact the GCC Group Support Team on 0345 260 1151 or