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Temporary 5% VAT Rate

Overview

  • The Government are reducing some VAT rated supplies down from the 20% standard rate to a 5% temporary rate.
  • It covers the period from 15 July 2020 to 12 January 2021.
  • Directed at the hospitality, hotel and holiday accommodation sectors as well as admissions to some attractions.

Food and drink

The temporary rate applies to:

  • The supply of food and non-alcoholic drinks for consumption in pubs, cafes, restaurants and similar establishments.
  • The supply of hot takeaway food and hot (non-alcoholic) takeaway beverages.

The temporary rate does not apply to the following and these remain at the standard rate:

  • Alcoholic drinks.
  • Supply of food and drinks that are supplied by catering services for consumption off of the premises. 

Hotel and holiday accommodation

The temporary rate applies to:

  • The provision of sleeping accommodation in hotels, inns, boarding houses, B&Bs, private residential clubs, hostels and  serviced flats (other than those used for permanent residence).
  • The supply of seasonal pitches for caravans.
  • The provision of pitches for tents and camping facilities.

Admission to certain attractions

The temporary rate applies to:

  • Admission fees to attractions e.g. theatres, museums, fairs, zoos, amusement parks, shows, studio tours, factory tours and cultural events.
  • If the main supply is the admission fee and there is an incidental supply included as well, the entire supply will attract the temporary reduced rate.

Important Note:
If the admission fee is currently VAT exempt that takes precedence over the temporary measure.

Other issues worth noting

  • If you are using the Flat Rate Scheme then certain percentages within the Scheme will be reduced by HMRC to take into account the temporary measures. 
  • The temporary reduced rate will have an effect on those businesses using the Tour Operators Margin Scheme.
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Added By: Sharon Worger on 13th Jul 2020 - 10:35
Last Updated: 13th Jul 2020 - 11:08

Number of Views: 35
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