Hospitality industry sees 5% VAT cut on certain supplies

There’s no doubt that the hospitality sector has been hard hit by the changes brought on by lockdown measures implemented for combating coronavirus.

So, the announcement to open up again on 4 July brought a sigh of relief for many pubs, bars and restaurants around the country. 

The latest measures announced by the government on 8 July is a cut to the standard VAT rate of 20% to 5% for certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions. This reduction will come into effect from 15 July 2020 and runs until 12 January 2021.

This provides support for many small businesses still being affected because of the long closures and continued social distancing measures in place now that hospitality venues are open again.

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

• On premises consumption: food and non-alcoholic beverages including restaurants, cafes and pubs
• Takeaway: hot takeaway food and hot non-alcoholic beverages
• Admissions to the following attractions not already eligible for the cultural VAT exemption such as:
  • theatres
  • circuses
  • fairs
  • amusement parks
  • concerts
  • museums
  • zoos
  • cinemas
  • exhibitions

Note that the VAT on alcohol remains at 20%.

Government guidance

For the full list of supplies to benefit, you can access the government announcement here.

VAT: reduced rate for hospitality, holiday accommodation and attractions

Accounting outsourcing services

We are ICAEW (Institute of Chartered Accountants in England and Wales) Chartered Certified Accountants in Oxted, Surrey. Our team of accountants are on hand to help you navigate your financial accounts so that you can achieve your strategic business goals.

If you’re in the hospitality industry and need business support with your financial accounts, get in touch and chat with our accountants about your VAT. For further information on the full range of accountancy outsourcing services including payroll, bookkeeping and company secretarial, please contact our team of accountants.