COVID-19 Update – 27 July – VAT rate cuts for hospitality

HMRC have now issued guidance on for the temporary 5% reduction of VAT to support the hospitality sector and here is what we know.

The reduced rate will apply from the 15 July 2020 to 12 January 2021

The reduced rate will apply to the supply of:

• food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
• hot takeaway food
• hot takeaway non-alcoholic beverages
• sleeping accommodation in hotels or similar establishments
• holiday accommodation
• pitch fees for caravans and tents, and associated facilities

For attractions that are not eligible for the cultural VAT exemption, the reduced rate will also apply to admissions for:

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

As we know VAT rules for this sector are already complex, so please refer to the updated VAT notices for more detailed guidance on the application of the changes, especially those affected by the rate reduction.

This guidance can be accessed using the following links:

• VAT: reduced rate for hospitality, holiday accommodation and attractions
• Catering, takeaway food (VAT Notice 709/1)
• Hotels and holiday accommodation (VAT Notice 709/3)
• Food products (VAT Notice 701/14)
• Tour Operators Margin Scheme (VAT Notice 709/5)
• Land and property (VAT Notice 742)

Further guidance is also available for the Eat Out to Help Out Scheme which highlights VAT will be based on the full amount of the customers bill.

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