The hospitality and leisure industries, were, like many other sectors, dramatically impacted by the COVID-19 pandemic. The Chancellor reduced VAT to 5% for a limited period from 15 July 2020. The aim was to help the sectors recover from the first national lockdown.

This rate was scheduled to end on 12 January 2021. In September 2020, the Chancellor announced that the 5% rate would remain until 30 March 2021.

Additional lockdowns left the hospitality and leisure sectors suffering further. At the Spring Budget 2021 on 3 March 2021, Rishi Sunak unveiled plans to alleviate some of the financial strain. The sector breathed a sigh of relief when the temporary 5% rate of VAT was extended until 30 Sept 2021.

Further relief came when Sunak announced, a new reduced rate at 12.5% will apply from 1 October 2021 until 31 March 2022. From 1 April 2022, the rate will revert to 20%. This will allow businesses to gradually return to standard rate VAT.

What supplies are affected by the new rate?

With the rates decreasing temporarily, it’s important to understand which supplies will benefit from the reduced rate VAT during this time.

 The below supplies currently benefit from the reduction:

  1. Admission to cultural attractions that do not already benefit from the cultural VAT exemption, such as theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and other similar cultural events and facilities.

If an admission to an attraction is already included in the cultural VAT exemption, this will take precedence over the reduced rate.

  1. Food and non-alcoholic beverages sold in restaurants, cafes and pubs. These must be consumed on site.
  2. Sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities.
  3. Hot takeaway food and hot takeaway non-alcoholic beverages.
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Any questions?

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