COVID-19: temporary VAT reduction for hospitality, holiday accommodation and attractions

On 8 July the Chancellor announced that the rate of VAT for certain supplies of hospitality, holiday accommodation and admission to attractions would be subject to a temporary 5% reduced rate of VAT.

This reduction in the VAT rate will take effect for supplies made between 15 July 2020 to 12 January 2021.

The following supplies will qualify for the temporary 5% reduced rate during this period:

  • 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; and
  • admission to attractions that are not eligible for the cultural VAT exemption, including theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities.

For those business that use the flat rate scheme (FRS), certain percentages have been reduced in line with this temporary VAT rate reduction.

More information on what to do when a supply straddles the introduction of the temporarily reduced rate on 15 July 2020 can be found in sections 30.7.4 to 30.9.2 of VAT Notice 700.

HMRC has published a range of further guidance notes on this temporary reduction, including:

 

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