Chancellor announces new VAT deferral payment scheme

Chancellor announces new VAT deferral payment scheme
 Credit: Chris Ratcliffe/Bloomberg

Businesses which deferred their VAT due to coronavirus will no longer have to pay a lump sum at the end of March.

In his economy update today (September 24) Chancellor Rishi Sunak announced he will allow businesses to spread their deferred VAT bill over 11 smaller repayments with no interest to pay.

According to Mr Sunak, nearly half a million businesses deferred over £30bn of VAT this year.

Additional measures announced by the chancellor include an extension for self-assessed income taxpayers on their outstanding tax bill over 12 months from next January.

The 15 per cent VAT rate cut for the hospitality and tourism sectors has also been extended until March 31.

Before the extension, VAT rates for the two sectors were expected to increase from 5 per cent back to the standard rate of 20 per cent on January 13.

Mr Sunak described the extension of the rate cut as a measure to support over 150,000 businesses and help protect 2.4m jobs through the winter.

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