The reduced VAT rate of 5% has been extended until 30 September 2021. Following this, an interim rate of 12.5% will be in place for a further six months with the standard rate of 20% returning in April 2022.
If you are a VAT registered business, check if you can temporarily reduce the rate of VAT on supplies relating to hospitality, accommodation, or admission to certain 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 31 March 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 https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091).
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 https://www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093).
Admission to certain 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 31 March 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.
More information about how these changes apply to your business can be found in VAT: Admission charges to attractions https://www.gov.uk/guidance/vat-on-admission-charges-to-attractions.
For the full details including the Flat Rate Scheme, The Tour Operators Margin Scheme, Retail Schemes and Accounting for supplies that straddle the temporary reduced rate see: VAT: reduced rate for hospitality, holiday accommodation and attractions - GOV.UK (https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions)
