Extensions to initial changes concerning VAT deferments

25.09.2020
Callum McCormack
VAT, COVID-19

As part of the Government’s package of measures introduced to support businesses during the COVID-19 epidemic, the Chancellor has announced two extensions to initial changes concerning VAT deferments and the reduced rating of certain supplies.

For VAT deferments, it was announced that businesses who deferred VAT, due from 20 March to 30 June 2020, will now have the option to pay the deferred VAT in instalments over a longer period of time. Instead of paying back the deferred VAT in full, in March 2021, these smaller interest free payments can be made until March 2022. This is an opt-in scheme that will need to be applied for. Businesses can still choose to pay their deferred VAT in full by March 2021 if they prefer. Further information on this scheme will be published by the Government shortly. 

The government have also announced that the temporary reduced rate of VAT at 5% which applies to certain supplies in the hospitality, holiday accommodation and attractions industries and was due to end on 13 January 2021, has now been extended. This extension will allow the reduced rating of relevant supplies to continue through to 31 March 2021. No changes have been made to the original guidance regarding which services are covered by the reduced rate rules.

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