In an urgent response to the coronavirus pandemic and to support businesses severely affected by forced closures and social distancing measures the government has announced a temporary reduction in the VAT rate for certain items.

There will be a 5% reduced rate of VAT for certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions.

This VAT rate reduction is a temporary measure will have effect from 15 July 2020 until 12 January 2021. It will apply to organisations that make supplies of hospitality, hotel and holiday accommodation and admission to certain attractions.

The following supplies will benefit from the temporary 5% reduced rate of VAT:

  • 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.

Some high-profile businesses have already confirmed that they will be passing the benefit of this rate reduction on to their customers. Historically VAT rate changes have often meant that prices remain the same for the general public and any benefit is retained by the selling entity. This is proving to be the case, particularly where smaller businesses are seeking to recoup their loses during the lockdown.

VAT regulations are notoriously complex so why not speak to one of experienced advisers?

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