Following the Chancellor’s Spring Statement last week, there are two main VAT implications which you may wish to consider.
- The Chancellor did not mention any extension to the time frame for the 12.5% hospitality VAT rate. As such, it is expected that this rate will revert to 20% from 1 April 2022.
- A new zero rate for the installation of energy saving materials has been announced, which will be effective from 1 April 2022. This rate will be applicable in Great Britain only – it cannot be applied in Northern Ireland due to the Brexit agreement. The rate will apply to qualifying installations and the materials being installed, for example the installation of solar panels. Consideration should be made to contracts spanning the change in VAT rate: the VAT to be applied will depend on the tax point rules.
If we can be of assistance in reviewing whether a supply meets the HMRC definition of energy saving materials; or to confirm which VAT rate applies on existing contracts, please get in touch.
As always, if we can help with any other VAT or duty matters please let us know.