VAT: Reduced Rate for Hospitality, Holiday Accommodation and Attractions

15th July 2020

If your business is VAT-registered, you may be able to temporarily reduce the rate of VAT on hospitality and accommodation supplies from 20% to 5%.

On 8th July, Chancellor Rishi Sunak announced that VAT on supplies for accommodation, hospitality and some UK attractions would be reduced to 5%. This will remain in place from today,15th July until 12th January 2021.

These changes have been welcomed as part of the government’s response to support hospitality businesses severely affected by forced closure.

The reduced rate specifically applies to:

  • Supplies of food and non-alcoholic drinks in restaurants, pubs, bars and cafes in the UK.
  • Supplies of hot takeaway food and hot takeaway non-alcoholic drinks.
  • Supplies of hotel and holiday accommodation
  • Admission to certain attractions in the UK.

Further Information and Advice:

More information and government guidance can be found at:

https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions

Find out when you need to pay VAT if you provide accommodation: https://www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093

There are also some adjustments you will need to make to your accounting software.

Sage has provided step by step advice for how to make these changes:

https://gb-kb.sage.com/portal/app/portlets/results/viewsolution.jsp?solutionid=200706130229045

FAQs around tax codes, invoicing and VAT returns:

https://gb-kb.sage.com/portal/app/portlets/results/viewsolution.jsp?solutionid=200709104345226&hypermediatext=null