The temporary VAT rate of 5% for the hospitality, holiday accommodation and attractions sectors is being replaced from 1 October 2021 with a reduced rate of 12.5%. This new rate applies until 31 March 2022.
Who is likely to be affected?
Businesses that make certain supplies relating to hospitality, make supplies of holiday accommodation or charge for admission to certain types of attractions.
What’s changed?
The government initially introduced a reduced rate of VAT back in July 2020, with a temporary 5% reduction, and was intended to last until January 2021. This was then subsequently extended until March 2021.
As part of the 2021 Budget, it was confirmed that the reduced rate would be further extended, this time until 30 September 2021.
Action to take
If you are a VAT registered business you must check if you can temporarily reduce the rate of VAT on supplies relating to hospitality, accommodation, or admission to certain attractions.
How long will this rate be in place?
From 1 October 2021, the new rate of 12.5% will be introduced and will remain in place until 31 March 2022 to support the transition back to the standard rate of VAT (20%).
For further information and guidance on VAT for your business, please visit the GOV.UK website.
You may also be interested in preparing your Business after Brexit, an article that discussing the changes for importing and exporting.
