Holiday Lets, Serviced Accommodation And The 5% VAT Rate
This will have a positive effect on the market ...
POSTED BY HELEN BEAUMONT ON 22/07/2020 @ 8:00AM
Chancellor Rishi Sunak's recent summer statement announced a number of initiatives to help the UK economy recover. Apart from raising the Stamp Duty Land Tax threshold which I discussed last week, he reduced VAT from 20% to 5% in the hospitality sector ...
The reduction in VAT from 20% to 5% on holiday lets and serviced accommodation is going to have a positive effect on the market!
copyright: acceleratorhams / 123rf
Holiday lets and serviced accommodation will benefit from the temporary VAT reduction meaning a night's visit that would normally cost £120 will now cost the customer £105. This is a significant saving if a family stays for a couple of weeks at your property.
Just like hotels, holiday lets and serviced accommodation are subject to VAT. This means that if your annual turnover exceeds £85,000 you must register for and charge VAT on the rental income at 20%. Since you may be dealing direct with the consumer, who cant recover this VAT, this can make you uncompetitive against your non VAT registered neighbour.
As an example:
If a family of four wanted to stay in a British costal property for two weeks, they could be looking at a final bill of £2,400 just on the accommodation. This may seem too much for many, but with the VAT reduction to 5%, this now becomes £2,100 which is a significant reduction of £300 on the holiday.
The Chancellor is hoping that the reduction in VAT from 20% to 5% on holiday lets and serviced accommodation is going to have a positive effect on the market.
Fingers crossed that your booking will jump considerably in the coming months.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about the new 5% VAT rate on your holiday let or serviced accommodation, do call me on 01908 774323, leave a comment below or click here to ping over an email and let's see how I can help you.
About Helen Beaumont ...
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
More blog posts for you to enjoy ...
Other bloggers you may like to read ...