How economy can impact business

• What is VAT?


  VAT is a tax added to goods and services.
• What is the standard rate of VAT as of June 2022?


  The standard rate of VAT is 20 percent.
• How does the strength of the economy impact customer spending in the hospitality and catering industry?


  • Strong economy: Customers have more disposable income.
  • Weak economy: Customers have less disposable income.
• What is the purpose of VAT?


  VAT raises money for the government from consumer spending.
• How is VAT calculated?


  VAT is calculated quarterly by completing a VAT return.
• What information is recorded on a VAT return?


  • Total sales and purchases
  • Amount of VAT owed
  • Amount of VAT that can be reclaimed
• Why is it important to budget for VAT?


  VAT could amount to a large bill that affects profits.
• What might businesses need to do if the rate of VAT increases?


  Businesses may need to increase their charges to cover the additional cost.
• How does the value of the pound affect the hospitality and catering sector?


  A good exchange rate may attract foreign consumers to the UK.
• What happens if the exchange rate is poor for UK customers?


  UK customers may choose to stay in the UK instead of traveling abroad.
• What impact has Covid-19 had on the hospitality and catering industry?


  Covid-19 forced businesses to make changes to stay operational.
• Where can one find details of Covid's impact on the UK hospitality sector?


  • Office for National Statistics website
  • Data available from January 2020 to June 2020