VAT cuts and deferrals announced by government

As part of a package of new measures to deal with the coronavirus pandemic, the government is to extend the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March 2021.

This will give businesses in the sector, which has been severely impacted by the pandemic, the confidence to maintain staff as they adapt to a new trading environment, the government said.

In addition, up to half-a-million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.

Additionally, around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the ‘Time to Pay’ self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

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