Wages Covered for New Staff 🥂 and Hospitality VAT issues

Newsletter Archive

🍺 VAT Update and Rishi Pays Your Wage bill*😜


* terms apply - as always! - see below 


Afternoon all

You know I'm not one to put out an update for the sake of an update or write extra text so that we get enough keywords to keep the marketing department happy.


Plus, we have no marketing department. (No offence to the marketers out there - great people, I love what you do!)


So I'll keep this short and sweet:


Flat Rate Scheme (FRS) for VAT

Following the reduction to 5% VAT for the hospitality and leisure industries, this week the Govt also update the new rates for those who use the Flat Rate Scheme. Here's the new rates to use in your software from, er, right now!


Catering: 4.5% (was 12.5%)

Hotels & Accommodation Zero% (was 10.5%)

Pubs 1% (was 6.5%)


If you're a pub landlord wondering why hotels get such a great deal and you don't, remember alcohol is still 20% 🍻🍸, whilst the main revenue (albeit not profit) for hotels is from the accommodation side.


This is not the forum to bore you with the merits and demerits of the FRS, but if you're affected by the new 5% rate, now is the time to consider whether a switch to (or from) the FRS is right for you. Give me a call, we can punch some numbers and see if it's worth exploring.


If you are BELOW the VAT threshold, the new lower rate means it actually might be worth you registering for VAT voluntarily, even if only for 6 months.


Takeaway Food - A Red Herring? 🐠

As the dust settles on the new 5% rate, PLEASE be careful when amending your VAT rates on your tills in respect of takeaway food.


The 5% for takeaway applies only to HOT food and HOT soft drinks [no mulled wine!] which does give some interesting outcomes. The most obvious is this: a packet of crisps to eat in? 5% VAT. Packet of crisps to take away? 20% 😱


HMRC will be wise to this - make sure you have a robust system for recording eat-in vs takeaway (especially if you didn't offer takeaway pre-Covid, your till system might not be set up to handle it). Ironically, it could be more profitable for your customers to eat in! If in doubt, give me a call.


Rishi Pays Your Wage Bill... 💰

...is the headline I would write if I worked for the Daily Mail. But it is some big news in the summer 'budget' which seems to have slipped under the radar.


We all know you'll get £1,000 if you keep furloughed staff on the books past the end of the year. But, what if you're lucky enough to be recruiting NEW staff?


Here's the craic: if you take on a young person (under 25...oh, that seems like such a long time ago now...😢) who is currently on Universal Credit, the govt will pay their wage bill plus training costs, up to £6,500 over a six-month period. That equates to 25 hours a week for someone on NMW. Of course, you can employ them full time and just pay the difference.


This applies to ALL sectors and there is NO LIMIT on the number of staff you can employ. Employers can apply to join the Kickstart Scheme from August [watch this space for details on how to register].


If you're thinking of taking your first member of staff on but were worried about the costs - NOW is the time to act!


In addition to the above, there are also cash incentives of up to £2,000 to take on an apprentice (assuming they don't meet the criteria above)



Thanks again to all of you who have left some kind words for us in the various social media outlets. Oh, stop it, stop it [er, no, please don't! It's very kind of you!]. If you have found our updates useful AND you're feeling in a good mood, get your clicker round some of these to leave us some feedback:

Google Places



That's all for now - but, as ever, give me a call if you want to talk through any support we can provide you with (even if we're not your accountant). Book a CV19 support call. 


Peter and the Blue Penguin team. 💙


Smallprint: this is a massively fluid situation. The above is our understanding right now, but things are changing daily. Please don't take any of this as legal advice, yada yada. We'll do our best to keep you up to date with more information as we get it. Please call us for clarification on any points above.


Blue Penguin Chartered Accountants • 16 Claremont Drive, Taunton TA1 4JF

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