Wow! Chancellor Rishi Sunak announced that VAT on food will be cut from 20% to 5% from next Wednesday 15 July 2020.
The measure is designed to support the hospitality industry post-lockdown by increasing margins.
That’s great… but what do you need to do to implement these last minute changes?
Here’s what you need to know and do to get ready for the VAT change within your iiko system.
How iiko is helping.
Fortunately, iiko is a modern, cloud-based system which means we have already responded and made rapid system changes in the cloud for all of our customers — ensuring more time to prepare and reduced administrative burden.
Currently, customers have three standard VAT categories in iiko:
- VAT (standard rate 20%)
- No VAT (0%)
- VAT F (a VAT rate that changes for eat-in and takeaway orders)
iiko has created two new VAT categories:
- VAT Reduced (5%)
- VAT F Reduced (a reduced VAT rate that changes for eat-in and takeaway orders)
You can already find them available in your iiko system.
What you will need to do.
You need to assign these VAT categories to your relevant food menu items in iiko. We have created easy to follow guides on how to do this:
iikoWeb (Basic plan users):
iikoOffice and iikoChain (Pro and Ent plan users):
What VAT rates should I apply?
Per HMRC Notice, the reduced 5% rate applies to:
- hot and cold food for consumption on the premises on which they are supplied.
- hot and cold non-alcoholic beverages for consumption on the premises on which they are supplied.
- hot takeaway food for consumption off the premises on which they are supplied.
- hot takeaway non-alcoholic beverages for consumption off the premises on which they are supplied.
If you want to know which types of food are zero-rated and which are standard-rated for VAT view the updated HMRC Notice.
When can I get started?
Don’t delay! Start assigning VAT categories to your relevant products in iiko. It will not affect your current VAT scheme until Wednesday 15/07/2020 morning.
You should plan to finish assigning your VAT categories before midnight Tuesday 14/07/2020.
On Wednesday morning, iiko will run a script to automatically change your VAT Reduced and VAT F Reduced rates to the new 5% rate. Saving you time and effort in administrative burden.