Budget 2021 – VAT and Indirect Tax summary

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

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Following the Budget 2021 announcements yesterday by the Chancellor Rishi Sunak, our expert Ruth Corkin has summarised the updates for VAT & Indirect Tax.

  • Reduced rate of 5% for hospitality and tourism to be extended to 30 September 2021 and then increases to 12.5% until 31 March 2022. From 1 April 2022, full standard rate applies.
  • VAT registration and deregistration thresholds frozen until 31 March 2024
  • Vehicle Excise duty for cars, vans and motorcycles increasing in line with RPI from 1 April 2021
  • Vehicle Excise Duty and levy for HGVs – VED frozen until 31 March 2022.  Levy suspended for another year until 31 July 2022
  • Fuel duty increase – frozen until 31 March 2022
  • Alcohol duty – frozen until 31 March 2022
  • Air Passenger Duty – Increase in line with RPI rom 1 April 2022. No increase to short haul standard and reduced rates. Long haul economy to increase by £2. Long haul premium economy/business/first class to increase by £5 and long haul in a private jet to increase by £13.
  • Gaming duty: Gross Gaming Yield bandings to increase in line with RPI
  • VAT penalty regime for late filing of returns and late payment of tax to change from periods starting on or after 1 April 2022 (Coincides with all VAT registered taxpayers being subject to MTD).
  • New legislation to make the manufacture, possession, distribution and promotion of Electronic Sales Suppression software. Powers to be granted allowing HMRC officers to access the software code.
  • Consultation on submitting information on income generated by sellers using online market places.
  • Creation of eight new freeports in England to stimulate growth in the import and export markets, which should be operational by the end of 2021. Sites in Liverpool, Teesside, Felixstowe/Harwich, Humber, Plymouth, Solent, Thames and East Midlands Airport. Benefits include:
    • A special Employers’ NI relief on salaries paid to employees on these sites from April 2022 and available until 2026;
    • 10% Structures and Buildings Capital Allowance rate for constructing or renovating buildings on the sites. Available for CT and income tax. Buildings must be in use by 2026 to qualify;
    • Enhanced 100% capital allowance rate for machinery and plant for use in freeport sites;
    • Full SDLT relief until September 2026 on the purchase of land and buildings to be used for commercial purposes on these sites;
    • Full business rates relief available to new businesses and certain existing businesses that are expanding.
    • No tariffs and lower rates of VAT on goods produced/exported/imported into free ports.

VAT can be a complex area. Everyone’s situation is different and getting advice that is tailored to your unique situation can ensure that your affairs are as efficient as possible. We offer a free initial consultation, so if you would like to speak to Ruth Corkin, please get in touch with her direct or call +44(0)330 024 3200 or email hi@hhllp.co.uk.

Visit our dedicated Budget page for more insights from this year’s budget.

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Ruth Corkin

Ruth has been involved with VAT for over 30 years. She started her VAT career as a Customs and Excise Officer in Essex and then moved into consultancy with a variety of well-known accountancy firms. She is well known in the VAT world and is the proud author of many articles and technical works.

Contact Ruth at ruth.corkin@hhllp.co.uk or on 01908 713 860