ANNOUNCEMENT 09 Jul 2020

On 9 July 2020, the UK government announced temporarily reducing the VAT rates on supplies relating to hospitality, accommodation, and attractions to 5%.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

HM Revenue & Customs Administration of the UK, Guidance on VAT, “VAT: reduced rate for hospitality, holiday accommodation, and attractions”. Available at: https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions

HM Revenue & Customs Administration of the UK, Guidance, “Hotels and holiday accommodation (VAT Notice 709/3)”. Available at: https://www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093#history

Government of the United Kingdom, "Winter Economy Plan". Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/921060/CCS207_CCS0920237970-001_Winter_Economy_Plan_print.pdf

Inception date: 15 Jul 2020 | Removal date: 30 Sep 2021

Tax or social insurance relief

On 9 July 2020, HM Revenue and Customs Administration of the United Kingdom announced temporarily reducing the VAT rates on supplies relating to hospitality, accommodation and attractions to 5%. The decision is taken in response to the coronavirus (COVID-19) pandemic to support businesses severely affected by forced closures and social distancing measures.

More specifically, the supply of food and non-alcoholic beverages in a restaurant, café or pub; supply of sleeping accommodation in a hotel or similar establishment, supply of holiday accommodation, caravan and tent pitches; and charging a fee for admission to certain attractions will be subject to 5% VAT rate instead of a standard VAT rate of 20%.

Reduced VAT rates will enter into force on 15 July 2020 and will be effective until 12 January 2021.

On 24 September 2020, the UK government announced extending the temporary VAT reduced rate for hospitality and tourism sectors until 31 March 2021. 

On 3 March 2021, the UK government extended the reduced rate of VAT of 5% until 30 September 2021. 

Effective from 1 October 2021, the UK government will apply 12.5% VAT on the subject services (see related state act). 

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