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VAT: reduced rate for hospitality, holiday accommodation and attractions

The government made an announcement on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to:

•             Hospitality

A supply food and non-alcoholic beverages for consumption on your premises, between 15 July 2020 and 12 January 2021 you will only need to charge 5%.

You will also be able to charge the reduced rate of VAT on your supplies of hot takeaway food and hot takeaway non-alcoholic drinks

•             Hotels and holiday accommodation

The temporary reduced rate will also apply if you supply sleeping accommodation including hotels, charge fees for caravan pitches, tent pitches and camping facilities.

•             Certain attractions

If you charge a fee for certain attractions and the supplies are currently standard rated you will only need to charge the reduced rate of VAT.

The temporary reduced rate will apply to supplies that are made between 15 July 2020 and 12 January 2021.

Specific guidance for each of the areas above can be found by clicking the relevant links below:

Hospitality 

Hotel and holiday accommodation

Admission to certain attractions and what attractions are eligible

Other considerations

HMRC have issued detailed guidance on the reduced rate scheme which can be found here and includes the following:

•             The Flat Rate scheme – including the reduced percentages that apply during the reduced rate period

•             The Tour Operators Margin Scheme

•             Accounting for supplies that straddle the temporary reduced rate

If you do have supplies that fall into any of these categories then please become familiar with the VAT rules.

Should you have any concerns with application of the rules for your business or how to record these within your accounting software then please contact us.

We have issued a separate article on how to apply the VAT changes to your accounting software.

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