HMRC has provided guidance about the temporary reduction in the VAT rate for hospitality, holiday accommodation and attractions as announced by the chancellor in his recent statement.
The reduced rate of 5% will be in place until 12 January 2021, giving applicable businesses 6 months’ relief at a very difficult time. HMRC’s guidance has confirmed that the new rate will apply to the supply of:
- food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs;
- hot takeaway food;
- hot takeaway non-alcoholic beverages;
- sleeping accommodation in hotels or similar establishments;
- holiday accommodation; and
- pitch fees for caravans and tents, and associated facilities.
Also benefitting from the 5% reduced rate will be admissions to attractions not eligible for the cultural VAT exemption:
- theatres
- circuses
- fairs
- amusement parks
- concerts
- museums
- zoos
- cinemas
- exhibitions
- similar cultural events and facilities
VAT notices
HMRC has also updated a number of its VAT notices to assist businesses in understanding how the change affects their sectors:
VAT: reduced rate for hospitality, holiday accommodation and attractions
Catering, takeaway food (VAT Notice 709/1)
Hotels and holiday accommodation (VAT Notice 709/3)
Food products (VAT Notice 701/14)
Tour Operators Margin Scheme (VAT Notice 709/5)
Land and property (VAT Notice 742)
Eat out to help out scheme
Guidance is also available about the new Eat Out to Help Out Scheme which offers a discount to encourage people to dine out and highlights that VAT will be based on the full amount of the customer’s bill.
Businesses can use the scheme;
- all day, every Monday, Tuesday, and Wednesday from 3 to 31 August 2020
- to offer a 50% discount on food or non-alcoholic drinks to eat or drink in (up to a maximum of £10 discount per diner)
- to claim the money back from the government
Registration for the scheme is open until 31 August on the GOV.UK website.
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