Hospitality VAT Rates return to 20%
It has recently been announced by the government that Hospitality VAT Rates are to return to 20%. This change, effective from 1st April 2022, will see a rise in prices for hospitality sector services including restaurants, catering and hotels. So what does this mean for your business? And what can you do to prepare?
One of the hospitality sector's main talking points at the moment is the VAT increase from 12.5% to 20%. This increase, which is set to come into effect on 1st April 2022, has left many businesses scrambling to understand exactly how it will impact their bottom line. Hospitality businesses will have to increase their prices in order to accommodate the higher VAT rate, and this could lead to a reduction in customer numbers. In addition, there is a risk that customers will simply choose to go elsewhere for their hospitality needs if they feel that prices have become too expensive. As a result, it is essential that businesses have a good understanding of how the VAT increase will affect them, and that they communicate this knowledge to their customers in an transparent way.
What can be done to help?
Any hospitality business - whether it’s a restaurant, café, pub or hotel - will have experienced increased costs over the past few years. The hospitality sector is one of the most heavily taxed in the UK, with businesses having to pay VAT at 20%, as well as facing the rising costs of the minimum wage. In addition, many hospitality businesses are also facing increased costs for rent and utilities. Despite these challenges, there are some steps that hospitality businesses can take in order to control costs and survive in the current climate. One key area is to focus on wastage, both in terms of food and drink and in terms of energy. By reducing wastage, hospitality businesses can make significant savings that can help to offset other increased costs.
The increase in vat rates to 20% is definitely something business owners need to be aware of. However, it’s important not to get too bogged down by the change and lose sight of what’s really important – controlling your expenses and running a successful business. Do you have any thoughts on the matter? We would love to hear them!
