Rachel Reeves Announces Summer VAT Reductions Across The UK

The VAT reduction will take effect when the schools break up for the summer holidays at the end of June, and will end on the 1st September when school resumes for the new academic year. Some VAT rates will only apply to children’s purchases, while others will apply across the board.

The reductions only apply to certain products, including tickets for theme parks, zoos, and museums, and a separate policy will suspend the import tariff on roughly 100 basic food items, which should lead to some helpful savings on weekly shops for everybody!

When it comes to managing your business, these temporary VAT reductions are reminiscent of the Eat Out to Help Out scheme the UK implemented during the Covid-19 pandemic, where VAT prices were reduced to make it easier for businesses to cut prices and kickstart the economy.

Thankfully, Epos Now is equipped with tools and integrations designed to make awkward and potentially time-consuming changes like this much easier. So today, we’ll run through all the changes being made to VAT, and we’ll show you how you can use your Epos Now system to ensure you get the full benefits without breaking a sweat (which is some feat in this summer heat!). We’ll cover:

• What VAT changes are happening in the UK?

• When do the reduced VAT rates come into play?

• Which businesses will be affected by the reduced VAT rates?

• How can I use my Epos Now POS system to get the full benefit of the reduced VAT?

What VAT changes are happening in the UK?

The VAT reduction will apply to specific products and, in some cases, only when the purchases are for children enjoying the summer holidays. But the change in rate is from 20% down to 5% on all affected sales.

Not every business will see some of their VAT change, so here’s a list of all the sales that the reduction will apply to:

• Theme park, museum and zoo tickets including admission tickets, ride, and seasonal exhibit tickets for all ages, whether bought in-person or via online booking.

• Cinema, theatre, and concert tickets (children only) including all tickets purchased for children’s use. Family bundles may require specific alterations.

• Children’s indoor play admission including soft play, activity centres, and children’s entertainment venues.

• Meals and drinks in restaurants and cafes (children only) including kids’ menu meals, children’s meal deals, and products sold in children’s portions.

Which food products will the UK remove the import tariff on?

Rachel Reeves has not yet announced the full list of products having tariffs removed, but the list is expected to include crisps and chocolate, biscuits, beans, margarine, fruits, vegetables, nuts, and juices.

When do the reduced VAT rates come into play?

The VAT reductions are timed to coincide with the school holidays across the UK so that children and families can make the most of the summer, fuelling economic growth throughout the season.

This means they will come into effect on the 25th June when Scotland’s schools finish for the year, and will run until the 1st of September when school resumes. This means the reduced VAT rates will be in effect for just under ten weeks, giving businesses and consumers plenty of time to benefit.

Which businesses will be affected by the reduced VAT rates?

If you’re still not sure whether you’ll need to adjust your VAT rates and adjust your prices over the summer, here’s a list of the businesses that will be paying lower VAT on some of their products:

• Restaurants and bars

• Cafes

• Hotels

• Leisure and activity centres

• Theme and amusement parks (and funfairs)

• Museums

• Cinemas

• Ticketed tourist attractions

Which businesses will be affected by the removal of import tariffs?

Given the number of businesses that sell the common foods the tariffs will be removed from, more businesses than not will be able to benefit from the lower cost of stocking shelves or purchasing ingredients. But those that stand to benefit most include:

• Supermarkets

• Convenience stores

• Grocers

• Restaurants, pubs, and cafes

• Bakeries

• Food vans and street food vendors

• Hotels

• Takeaways

How can I use my Epos Now POS system to get the full benefit of the reduced VAT?

Epos Now’s expansive business management software means users don’t need to panic when making changes to their products and services, whether big or small. The user-friendly interface and wide variety of features and functions mean there’s usually more than one way of getting the job done. Once again, this proves true with these temporary VAT changes and the complexities involved in applying them correctly.

So here are the different approaches you could take using the back office or Bulk Import app to update your products this summer, and a handy guide to getting the job done!

Updating VAT rates in your back office

If you only expect to have a few of your products affected, the quickest approach may be to drop into your back office and head to Manage>Products>Product List, and manually updating the tax rate where necessary.

If you’ve never used a 5% tax rate before, you may need to tap “Create tax rate”, which will take you to the Banking section of your till under Setup. Here, you simply name the rate something obvious like 5% Tax, add 5 to the percentage, add a tax code for your accountant, and click Add. Simple!

It’s easy enough to adjust the sales price at the same time, passing those savings on to the customer. We suggest looking at the margin before adjusting the tax to see what percentage you’re making on your sales, then adjusting the sale price after changing the tax rate until you’re at the same margin.

Using Bulk Import to update your VAT rates

The Bulk Import spreadsheet tool is a popular app with Epos Now users, allowing you to export your data from your account into a spreadsheet so you can make quick, easy changes (like updating products, prices, stock levels etc), then reupload the new, correct data to your account.

In this case, you could use several different templates to update your VAT rates for the summer, including the dedicated Quick Edit Product Tax Rate, which provides product names and tax rates so you can quickly filter through your product list, changing the rates for the relevant products. This spreadsheet also has a selling price you can adjust, which allows you to speedily pass the savings you’re making onto customers (which Rachel Reeves states is the intention behind the scheme, though this has not been made a legal requirement).

Alternatively, you could download the Product Update Template, which you can filter to only include products from certain suppliers that will require editing. This sheet will have more information on it, but one column still has the VAT Rate option (or Tax Rate), which can reduce to 5 in June and raise back up to 20 in September. You can also reduce figures, including cost price and sale price, and keep your profit margins accurate.

One more option to consider on the product update template is duplicating some products that will have different tax rates depending who you sell to. For example, if you’re running, say, a trampoline park, admission ticket tax rates are only reduced for children. Parents wishing to accompany their children will still need to be taxed 20%. Therefore, you could duplicate your ticket row to create a new product, which you could name “Admission - Child tax rate” and set the VAT to 5%.

Want more advice on using Bulk Import? Take a look at our guide here!

The Bulk Import app is downloadable from the Epos Now AppStore, with a 30-day free trial. Following the trial, the app costs £15 per month.

Duplicating your product and keeping stock accurate

If you want to make life simple for your staff, you might like to create a separate product for children and adult sales with different tax rates. But you might also be wondering, what will happen to my stock figures if I do that? Don’t worry! That’s easily remedied.

If the stock, or number of tickets depending on the sale type, needs to come from the same source, you’ll need to set up a master product. Master products allow businesses to sell multiple forms of the same product. The simplest example is selling wine, which a business will sell as a bottle or as a number of glass sizes, but they all come from the same stock! Each time wine is sold, no matter the size, the correct amount of stock will be drawn from the master product.

Master products can be tricky, which is why we’ve got a video guide and a written guide you can use to figure out how to get them right!

Like this blog? Why not take a look at some of our other handy resources here.