Temporary 5% VAT rate for food, accommodation and attractions starts 15 July

Man social distancing in a quiet coffee shop

Temporary 5% VAT rate for food, accommodation and attractions starts 15 July

Updated:  15 July 2020

 

From Wednesday 15 July 2020 to 12 January 2021, to support businesses and jobs in the hospitality sector, the reduced 5% rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK. 

The 5% reduced rate of VAT will also apply to supplies of accommodation and admission to attractions across the UK and will also apply between  15 July 2020 to 12 January 2021.

Further guidance on the scope of this relief  is below, but due to the short notice of this change businesses should start planning straight away for changes to their accounting software, invoicing and prices.  Please contact us if you require assistance in getting ready for the changes.

 

VAT – REDUCED RATE OF 5%

 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
  • hotel and holiday accommodation
  • admissions to certain attractions

 

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

 

Reduced rate for hospitality, holiday accommodation and attractions

 

Hospitality

 

If you supply food and non-alcoholic beverages for consumption on your premises, for example, a restaurant, café or pub, you’re currently required to charge VAT at the standard rate of 20%. However, when you make these supplies 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.

 

More information about how these changes apply to your business can be found in Catering, takeaway food (VAT Notice 709/1). See here

 

 

Hotel and holiday accommodation

 

You will also benefit from the temporary reduced rate if you:

  • supply sleeping accommodation in a hotel or similar establishment
  • make certain supplies of holiday accommodation
  • charge fees for caravan pitches and associated facilities
  • charge fees for tent pitches or camping facilities

 

More information about how these changes apply to your business can be found in Hotels and holiday accommodation (VAT Notice 709/3). See here 

 

VAT on admission charges to attractions

 

 

If you charge a fee for admission to certain attractions where the supplies are currently standard rated, you will only need to charge the reduced rate of VAT between 15 July 2020 and 12 January 2021.

 

However, if the fee you charge for admission is currently exempt that will take precedence and your supplies will not qualify for the reduced rate.

This applies to:

  • shows
  • theatres
  • circuses
  • fairs
  • amusement parks
  • concerts
  • museums
  • zoos
  • cinemas
  • exhibitions
  • similar cultural events and facilities

Examples of where the reduced rate may apply could be attractions such as:

  • a planetarium
  • botanical gardens
  • studio tours
  • factory tours

More information about how these changes apply can be found in VAT: Admission charges to attractions.