VAT in the hospitality trade

Hospitality and leisure have been one of the worst hit industries during the pandemic. Many bars and restaurants will not reopen as a result of the pandemic due to how adversely they have been affected.

On 8 July 2020 the government made an announcement allowing VAT registered businesses to temporarily reduce VAT to 5% on certain suppliers between 15 July 2020 to 31 March 2021. As time progressed and it became apparent that the pandemic would continue having a negative impact into 2021, the government made an announcement in the 2021 budget legislating the extension of 5% reduced VAT up to 30 September 2021 and a new rate of 12.5% from 1 October 2021 to 31 March 2022.


If you supply food and non-alcoholic beverages for consumption on your premises, for example, a restaurant, café or pub, when you make these supplies you will only need to charge 5% up to 30 September 2021 and at 12.5% to 31 March 2022.

You will also be able to charge the reduced rate of VAT on your supplies of hot takeaway food and hot takeaway non-alcoholic drinks.

Hotel and holiday accommodation

You will also benefit from the temporary reduced rate if you:

  • supply sleeping accommodation in a hotel or similar establishment
  • make certain supplies of holiday accommodation
  • charge fees for caravan pitches and associated facilities
  • charge fees for tent pitches or camping facilities

Admission to certain attractions

If you charge a fee for admission to certain attractions where the supplies are currently standard rated, you will only need to charge the reduced rate of VAT going forward.

However, if the fee you charge for admission is currently exempt that will take precedence and your supplies will not qualify for the reduced rate.

It is important that businesses ensure their till systems are kept up to date to account for the changes in VAT. Many bookkeeping systems are capable of dealing with the changes being implemented.

We have a team of accountants and bookkeepers who are able to assist and advise on the correct way forward. For more information or to book a free, no obligation meeting, please contact or call 01482 427360.

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