You may have seen in last week’s Government Summer Briefing that the Chancellor Rishi Sunak introduced some temporary measures to help certain industry sectors badly affected the Coronavirus outbreak. These changes are being brought in as an urgent response to the COVID-19 pandemic to support businesses severely affected by forced closures and social distancing measures.
For any organisations that make supplies of hospitality, hotel and holiday accommodation and admission to certain attractions, he announced that he is reducing VAT from 20% to 5%.
This cut in the VAT rate comes into effect today, 15th July 2020 and will apply until 12th January 2021.
The affected supplies which will benefit from the temporary 5% reduced rate of VAT are:
- 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:
- amusement parks
- similar cultural events and facilities
What does this mean to you?
When you go out to eat at a restaurant, or buy a take away coffee, or when you stay overnight in a hotel, you should benefit from a lower bill due to the VAT reduction.
The Government are hopeful that the reduction will stimulate the industry sectors so that they can recover from the past few months.
If you have any questions surrounding the new temporary rules for VAT and how it may affect you, then please do not hesitate to get in touch with us.