In the spring Budget, the Government announced an extension to the 5% VAT cut for leisure and tourism businesses. We look at the implications of this for our clients as well some of the other factors affecting the residential and commercial property sectors.
The extension of the 5% VAT cut was a welcome relief for the leisure and tourism sector as so many business owners were hit hard by the pandemic. Many of our clients have been busy preparing for reopening with demand from consumers particularly high for domestic holidays over the summer season. The extension will help many larger holiday accommodation businesses in their recovery throughout the year.
Chancellor, Rishi Sunak, said “We’re going long, extending our support well beyond the end of the roadmap, to accommodate even the most cautious view about the time it might take to exit the restrictions. As well as supporting people’s jobs, incomes, the lowest paid and most vulnerable, this Budget also protects businesses.
The introduction of an interim rate of 12.5% from the 1st October will also help soften the impact on cash flow through the winter of 2021-2022 before the reversion to the full 20% rate in April 2022. Government data suggests there are around 150,000 businesses which will benefit from the VAT reduction, supporting approximately 2.4 million jobs within the leisure and tourism sector.