2020-21 figures show Value Added Tax receipts down 22% due to emergency VAT deferral
Figures released 14 December show the full effect of the COVID-19 pandemic on VAT receipts, including the March and June 2020 VAT payment deferral scheme used by over half a million businesses. Arts, Entertainment and Recreation sector and Accommodation and Food Services were the most severally hit. Financial Services (banking and insurance) overtook these sectors for the first time.
By contrast, Construction was a major gainer, up 12% on last year.
The VAT takings are made-up of two components:
- Home VAT on selling goods or services within the UK, which decreased by £24.2 billion; and
- Import VAT due on goods imported into the UK from abroad (including the EU), which decreased by 4.2 billion following the introduction of the Brexit Postponed VAT Accountingwhich records import VAT under Home VAT.
COVID-19 UK VAT deferral scheme – delayed £34 billion in receipts
This provided the option to VAT registered businesses to postpone the payment of VAT due from this period until 31 March 2021. There was a later scheme to repay this VAT from June 2021 in instalments. Over half a million taxpayers participated in the scheme, delaying £34 billion in VAT payments.
New VAT registration hit record
Despite the decline in takings, there was encouraging news on the number of new VAT registrations. These were up to 302,002 for the year to make a net total 2.5 million live registrations. In 2019-20, the corresponding new registrations number was 268,136 – a 15% rise