A fifth of small UK businesses are expecting their performance to be ‘much worse’ over the next three months, with consumer confidence levels still low as a result of COVID-19.
In a move to restore this confidence, the Chancellor’s Summer Statement announced measures to protect, support and maintain those hardest hit by the lockdown. The most significant measures included a temporary VAT change for hospitality and tourism sectors to 5%, and the introduction of the ‘Eat out to help out’ 50% discount scheme on meals and non-alcoholic drinks Monday to Wednesday, up to a maximum discount of £10 per head for everyone, including children.
The Eat out to help out scheme starts from every Monday to Wednesday from the 3rd August until the 31st August at all participating restaurants. You don’t need a voucher to claim the 50% discount, there is no minimum spend, and you can use it as many times as you like; however, you cannot claim the discount on alcoholic drinks or service charges.
Businesses can register for the scheme using a government portal. Rather than giving diners vouchers, businesses will need to claim back the money, with the funds entering your account within five working days.
You can find out more about the scheme on the government’s eat out to help out guidance page.
What does the VAT cut mean for businesses?
The VAT change for hospitality and tourism, along with the ‘eat out to help out’ discount, is as much about getting people out and spending money with those most affected by the COVID-19 lockdown as it is about financial support.
In practical terms, there are some things that businesses will have to consider. For example, will these new savings be passed on to the consumers to encourage them to spend, or will they be used to support the business and staff?
These VAT changes may involve updating, menus, price lists and accounting software. In addition, there may be some complexities involving the difference between the temporary reduced rate period and VAT accounting periods.
We highly recommend that you work with your accountant to ensure you’re taking full advantage of the new schemes. We also recommend that you continue to work with your marketing team to communicate any new changes as studies have found that 75% of consumers say that brands should inform people of what they’re doing.
How can we help?
If there is anything we can do to help you manage your current financial situation, please call us on 0121 550 8525. We’ll be happy to talk you through some options based on your individual needs. Contact us.
Please note that during this time, we are experiencing a high number of enquires. We are responding to everyone; however, it may take longer than normal. We appreciate your patience.