On 8 July 2020, as an urgent response to the pandemic, the government announced a number of VAT measures including a temporary reduced VAT rate for the hospitality, hotel and holiday accommodation sectors as well as admission to certain attractions.
This VAT cut, from 20% to 5% was designed to boost customer demand in response to the economic crisis caused by the pandemic.
This cut in the VAT rate took effect from 15 July 2020.
In the spring 2021 Budget an extension to the 5% rate was announced until 30 September 2021 with the VAT rate for the sector increasing to 12.5% from 1 October 2021 until 31 March 2022.
The affected supplies which have benefitted from the reduced VAT rates are:
- Food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
- Hot takeaway food and hot takeaway non-alcoholic beverages
- Sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities
- Admissions to the following attractions that are not already eligible for the cultural VAT exemption such as: theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities
Standard rate will apply from 1 April 2022
For businesses within the sector, the temporary rates have no doubt been a welcome measure but it’s soon coming to an end.
From 1 April 2022, the VAT rate for the sector will return to the standard rate – currently 20%.
Get in touch
Cowgills is a leading independent firm of Chartered Accountants and Business Advisors based in the North West of England – from Greater Manchester to Liverpool. We use our sector experience to deliver tailored financial solutions and support for businesses.
If you need any help with VAT get in touch with our VAT Director Gemma at Gemma.McCaldon-Gower@cowgills.co.uk, or visit our website here.
Disclaimer
The information was correct at time of publishing but may now be out of date.
