The hospitality new VAT rate is now 12.5%

14 October, 2021 · 3 min read

After a period in which the UK VAT rate was just 5% for certain industries, it’s now been raised to 12.5%. We explain what’s happening and why.

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Helping hospitality during the pandemic

Back in July 2020, in response to the Covid-19 pandemic, the government announced a temporary new VAT rate of 5% for supplies relating to hospitality, hotel and holiday accommodation and admission to certain attractions. This was originally due to last until 12 January 2021, but was eventually extended to last until 30 September 2021. 

The temporary 5% VAT rate period has now finished, but instead of increasing it back to 20%, the government has decided to offer a temporary new VAT rate of 12.5%. This will last until 31 March 2022.

What does this new VAT rate apply to?

The new VAT rate applies to anything that falls into the industry of hospitality, hotel and holiday accommodation and certain transactions. 

This can include:

  • 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

If the government does plan to extend this VAT rate period to beyond 31 March 2022, we’ll let you know as soon as possible here on the ANNA blog.

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