Blogs & News
Is your business affected by the increase to the reduced hospitality VAT rate?
5 April 2022
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.
- On the menu bar, click Settings, click Configuration then click Tax Codes.
- Select tax code T11 or the next available code and click Edit.
- 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.