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VAT changes to hospitality - September 2021

You most probably are aware of the reduction to 5% of specific VAT supplies in the hospitality industry, which the Chancellor introduced on 8th July 2020 to help the sector through COVID.

The Chancellor then extended the 5% VAT until the end of September 2021.

From 1st October 2021 any VAT category benefitting from the 5% will now be replaced with 12.5% VAT until 31st March 2022.

GOV reference

The following supplies, which already currently benefit from the 5% reduced rate, will continue to benefit from the reduced rates through the extension:

  • 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
  • admissions to the following attractions that are not already eligible for the cultural VAT exemption such as:
    • theatres
    • circuses
    • fairs
    • amusement parks
    • concerts
    • museums
    • zoos
    • cinemas
    • exhibitions
    • similar cultural events and facilities

Where admission to these attractions is covered by the existing cultural exemption, the exemption will take precedence.

The types of supplies that the relief applies to will remain unchanged when the new temporary 12.5% rate is introduced on 1 October 2021.

HMRC's website also says: "Further guidance on the operation of the new reduced rate will be published when it comes in to force on 1 October 2021"






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