Budget Highlights VAT, SDLT and Duties
Jason Croke, VAT Director, summarises some of the Chancellor’s Budget announcements concerning VAT, SDLT and Duties.
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The reduced rate (5%) for catering and hospitality, which was due to end 31st March 2021 will be extended for a further 6 months, until end of September 2021 and then a new VAT rate of 12.5% will be applied for a further 6 months to end of March 2022 and then will return to standard rate (20%) after that. The aim is to smooth the potential cliff edge for businesses in this sector, no longer having to go from 5% to 20% overnight.
This is a welcome announcement from the government, this sector has been hit particularly hard and the extension of the reduced rate perhaps factors in the potential situation that lockdown may be extended beyond the published timetable or as lockdown eases, the public may require some encouragement to come out from their long lockdown.
The VAT registration threshold, currently at £85K will remain unchanged for two years.
The current SDLT holiday was due to end 31st March 2021. To avoid the issue of delays in the house purchase process due to lockdown conditions, this holiday has been extended to 30th June 2021, a three month window which should accommodate those deals currently going through. The SDLT holiday then changes for a further period whereby the first £250k will be at the Nil rate (previously only the first £125,000 was subject to Nil rate). So this phasing or transitional aspect, like the reduced rate for VAT, is a sensible approach.
Alcohol and fuel duties frozen. This was widely expected and makes sense for now, but certainly for fuel duty, as the evolution of electric cars continues to grow, there will come a point where the revenue from fuel duty will drop off significantly, much like how tobacco duties took a drop when the ban on smoking in public places eventually saw tobacco sales fall and with it, the revenue from it.
If you would like any further insight or advice then please get in touch with Jason or fill out the form below.