From September 1st 2020, new VAT rates will apply temporarily as part of the government stimulus package up to and including February 28th 2021: The regular VAT rate will be reduced from 23% to 21%.
The government hopes that this tax cut will be passed on to customers, but there is no obligation to do so.
Taxation of Treatwell's new customer commission and monthly fee
While there is no obligation to do so, we will pass this tax cut on to our salons. While the gross amount of the new customer commission and the monthly basic fee to Treatwell does not change, the sales tax is reduced so that you pay Treatwell less on your total bill.
This means that there are a few things to understand when making this change, which we explain below.
Our commission system is different from other models. Instead of charging a commission for every booking, we only charge a commission when a customer books with you for the first time through Treatwell.
This means that the date on which a new customer makes an online booking via Treatwell in your salon forms the basis for calculating the VAT of the new customer commission for Treatwell. This differs from the date on which this new customer commission is actually listed on your invoice and the date on which the VAT is calculated for services and products in your salon, both of which are at the time of the appointment.
For this reason, all online appointments booked through Treatwell up to and including 31.8.20 will be taxed at 23% as usual, regardless of when the appointment takes place. It is, therefore, possible that both the regular (23%) and the new reduced VAT rate (21%) on the new customer commission will be shown in future Treatwell invoices.
Date of booking: 26/08/2020
Booking will take place on 02/09/2020 > 23% VAT will be charged on the new customer commission.
Date of booking: 26/08/2020
Booking will take place on 30/08/2020> 23% VAT will be charged on the new customer commission.
Date of booking: 01/09/2020
Booking will be on 03/09/2020> 21% VAT will be charged on the new customer commission.
The same applies to Treatwell's basic monthly fee. From September 1st, 2020 we will charge 21% VAT which will show on your invoice.
Taxation of services and products in the salon
You don’t need to worry about adjusting the reduced VAT rates in Treatwell POS and Connect, these will be adjusted automatically on the respective due date (01.09.2020).
The sales prices of your services and products stored in Treatwell POS and Connect will not be changed, as there is no obligation to pass the tax reduction on to your customers - this is up to you to decide.
If you want to reduce the prices on your service list, you can do so easily in Connect. Instructions can be found here.