Following Rishi Sunak’s announcement in the Summer Statement, HMRC have updated their guidance regarding the temporary reduced rate of VAT which will apply to supplies of hospitality, hotel and holiday accommodation and attractions.
The reduced rate of VAT (5%) will apply from 15 July 2020 until 12 January 2021 to the following supplies:
-
food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
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hot takeaway food and hot takeaway non-alcoholic beverages
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sleeping accommodation in hotels and similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities
Admissions to following attractions that are not eligible for the cultural VAT exemption:
- theatres
- circuses
- fairs
- amusement parks
- concerts
- museums
- zoos
- cinemas
- exhibitions
- similar cultural events and facilites
Please note that where admission to these attractions is covered by the existing cultural exemption, the exemption will take precedence.
This temporary reduction to the VAT rate applies to those who make supplies in the hospitality industry.
It does not affect intermediaries/agents as those businesses are not supplying the end consumer.
Equally, it does not cover prepayments or deposits as the tax point is created when the payment is received. Therefore payments made before 15 July will still be subject to VAT at 20%.
As with all changes to VAT there are some supplies which may not fit all the criteria. For example, the hire of a hotel room for more than 28 days will require further consideration.
If you have any questions, get in touch.
