Hospitality industry ― temporary reduced rate from 15 July 2020 ― 31 March 2021

Produced by Tolley
Hospitality industry ― temporary reduced rate from 15 July 2020 ― 31 March 2021

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Hospitality industry ― temporary reduced rate from 15 July 2020 ― 31 March 2021
  • Catering supplies
  • Retail schemes
  • Hotels and holiday accommodation, etc
  • What constitutes holiday accommodation
  • Long stay accommodation
  • Catering supplied with accommodation
  • Wedding packages
  • Holiday accommodation
  • Time-share and other multi-ownership schemes
  • More...

The Government announced on 8 July 2020 that the rate of VAT applicable to the following would be reduced to 5% from 15 July 2020 to 12 January 2021, and, following an announcement by Rishi Sunak on 24 September 2020, the reduced rate has been extended until 31 March 2021. These changes are being brought in as an urgent response to the coronavirus (COVID-19) pandemic to support businesses severely affected by forced closures and social distancing measures:

  1. supplies of catering and hot takeaway food

  2. sleeping accommodation in hotels and similar, campsites, etc

  3. admission fees charged to enter attractions that are not already eligible for the cultural exemption

VATA 1994, Sch 9, Group 1, paras (f), (g); SI 2020/728; VATA 1994, Sch 7A, Groups 14–16; HMRC Brief 10(2020)

More details on what is covered by the reduced rate can be found below.

Catering supplies

This section should be read in conjunction with the Food ― catering guidance note.

The reduced rate will be temporarily applied to supplies of:

  1. hot and cold food for consumption on the premises on which they are supplied

  2. hot and cold non-alcoholic beverages for consumption on the premises on which they are supplied

  3. hot takeaway food for consumption off the premises on which they are supplied

  4. hot takeaway non-alcoholic beverages for consumption off the premises on which they are supplied

It is important to note that any supplies of food and drink that are supplied as part of a supply of catering services for consumption off-premises remain standard-rated. Also, it does not cover supplies of alcoholic beverages. Also, the reduced rate does not apply to cold takeaway food or beverages so unless these were already liable to VAT at the zero-rate, they will remain standard-rated.

If the supplies are made under a catering contract and they are supplies of on-premises catering (for example, supplies in restaurants and similar establishments), these will also benefit from the temporary reduced rate with the exclusion of alcoholic beverages.

If the business operates

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