VAT – reduced rate of 5%

The government made an announcement on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT
VAT – REDUCED RATE OF 5%

The government made an announcement on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to:

 

  • hospitality
  • hotel and holiday accommodation
  • admissions to certain attractions

The temporary reduced rate will apply to supplies that are made between 15 July 2020 and 12 January 2021.

Reduced rate for hospitality, holiday accommodation and attractions

Hospitality

If you supply food and non-alcoholic beverages for consumption on your premises, for example, a restaurant, café or pub, you’re currently required to charge VAT at the standard rate of 20%. However, when you make these supplies between 15 July 2020 and 12 January 2021 you will only need to charge 5%.

You will also be able to charge the reduced rate of VAT on your supplies of hot takeaway food and hot takeaway non-alcoholic drinks.

 

More information about how these changes apply to your business can be found in Catering, takeaway food (VAT Notice 709/1). See: https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091

Hotel and holiday accommodation

You will also benefit from the temporary reduced rate if you:

  • supply sleeping accommodation in a hotel or similar establishment
  • make certain supplies of holiday accommodation
  • charge fees for caravan pitches and associated facilities
  • charge fees for tent pitches or camping facilities

More information about how these changes apply to your business can be found in Hotels and holiday accommodation (VAT Notice 709/3). See: https://www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093

 

VAT on admission charges to attractions

If you charge a fee for admission to certain attractions where the supplies are currently standard rated, you will only need to charge the reduced rate of VAT between 15 July 2020 and 12 January 2021.

 

However, if the fee you charge for admission is currently exempt that will take precedence and your supplies will not qualify for the reduced rate.

 

This applies to:

  • shows
  • theatres
  • circuses
  • fairs
  • amusement parks
  • concerts
  • museums
  • zoos
  • cinemas
  • exhibitions
  • similar cultural events and facilities

Examples of where the reduced rate may apply could be attractions such as:

  • a planetarium
  • botanical gardens
  • studio tours
  • factory tours

More information about how these changes apply can be found in VAT: Admission charges to attractions.

 

See: https://www.gov.uk/guidance/vat-on-admission-charges-to-attractions?utm_source=b70c8e4c-efcb-4e66-a3aa-6dbc482ad5f6&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Sam Niranjan & Co Logo

Need further help/guidance?

We can assist if you have more queries in relation to your personal situation. Feel free to contact us, Click logo above.

Disclaimer –

Sam Niranjan or Sam Niranjan & Co make no representations or warranties with respect to the accuracy or completeness of the contents of these posts and cannot accept any responsibility whatsoever for any liability, loss or risk, personal or otherwise, which may arise, directly or indirectly, from reliance on information contained in the blog posts. We are not Independent Financial Advisors, and our advice and comments should not be regarded as investment advice.

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest
error

Enjoy this blog? Please spread the word :)