The Chancellor has announced a temporary reduction in the rate of VAT to help promote the hospitality, holiday and visitor attraction sectors in the release from lockdown.
With effect from 15 July until 12 January 2021 the 5% rate will apply to certain supplies of food and drink to consume on the premises or to take away, to supplies of hotel and holiday accommodation, and to entry to certain attractions.
If you are in any of the businesses affected by the change you should look at the detailed guidance for each type of business.
For detailed advice on sales of food and drink see the revised VAT Notice 709/1. Note the following main points:
- The VAT rate on all alcoholic drinks remains at 20%.
- All food and non-alcoholic drinks served on the premises will be subject to 5%
- Cold take-away food remains at 0% but some cold take-away items are always standard rated, e.g. ice-cream, most drinks (but hot take-away, non-alcoholic drinks will be subject to 5%), and crisps.
- Hot take-away food and hot take-away, non-alcoholic drinks will be subject to 5%.
Off-site catering remains standard rated.
For some businesses the VAT position is going to be complicated and this needs careful consideration and a serious re-programming of EPOS tills.
For more information on hotels and holiday accommodation see the revised VAT Notice 709/3.
- Note that campsites and caravan parks are included in the scope of the 5% rate.
For more information on admission charges to attractions see VAT Guidance: VAT on admission charges to attractions.
- Note that admission to sporting events is excluded from the reduced rate.
- Entry to some cultural attractions is already exempt from VAT. These admission charges remain exempt.