As part of the withdrawal of Covid support to the hospitality and holiday industries, from 1 October 2021 the 5% rate that applies to certain supplies of hospitality, holiday accommodation and entry to attractions will be replaced by a temporary 12.5% rate.

All the same conditions that applied to the 5% hospitality rate will continue to apply.  The 12.5% rate will apply to eligible supplies whose tax point is on or after 1 October 2021.  The normal rules apply to supplies that straddle that date, for instance, where a deposit is received before 1 October and the supply is made on or after 1 October.

The relevant Flat Rate Scheme rates will also be amended to reflect the new rate.

If you are currently using the 5% you must make sure your sales and accounting systems can cope with the new 12.5% rate.

The 12.5% rate is intended to be temporary and is due to end on 31 March 2022.  After this date the VAT rates will return to the normal rates for these services.