During the Chancellor's Winter Economy Plan announcement on 24 September 2020, the temporary reduced 5% VAT rate would be extended until March 31st next year to support more than 150,000 businesses in the hospitality and tourism sector and protect 2.4 million jobs through the winter.
Who will benefit from the lower VAT rate?
The changes are being brought in as an urgent response to the coronavirus (COVID-19) pandemic to support businesses severely affected by forced closures and social distancing measures.
Sunak said: "This is a £4 billion catalyst for the hospitality and tourism sectors, benefiting over 150,000 businesses, and consumers everywhere."
The following supplies will benefit from the temporary 5% reduced rate of VAT:
food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
hot takeaway food and hot takeaway non-alcoholic beverages
sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities
admissions to the following attractions that are not already eligible for the cultural VAT exemption such as:
theatres
circuses
fairs
amusement parks
concerts
museums
zoos
cinemas
exhibitions
similar cultural events and facilities
Where admission to these attractions is covered by the existing cultural exemption, the exemption will take precedence. Firms can choose whether or not to pass on the reduction to consumers by lowering prices, although this is not mandatory.
Please get in touch with Andrew Marshall for VAT advice for your business on 07887581852 or email Andrew directly using the link below.
