cheap accountants - Covid-19

In the final part of our three blog articles relating to the recent Government Covid-19 economic stimulus packages I will outline the changes to the rate of VAT for the Hospitality and Tourism sector. The main areas of the sector to benefit from the slash in the VAT rate are restaurants, cafes, entrance to tourism and cultural events, hotels and accommodation (including house rentals).

We previously blogged about the 50% Off Food Voucher and the £1,000 Job Retention Bonus. So, take a look at these other two blog articles if you are interested in reading more about the Government’s Covid-19 rescue packages and announcements.

VAT rate cut from 20% down to 5%

As of 15 July 2020, the rate of VAT for Hospitality and Tourism will be cut from the current standard rate of 20% down to a reduced rate of 5%. This reduced rate of VAT will apply up until 12 January 2021.

It is expected that this measure alone will cos the UK Government £4 billion in lost tax revenue. Adding to the already whopping Covid-19 bill of £49 billion, already spent to date.

Will my business benefit?

The VAT cut will benefit the following list of businesses:

  • Restaurants, Cafes, Pubs (excluding alcohol)
  • Hospitality
  • Hotels
  • B&B’s
  • Home rentals
  • Caravan and tent sites
  • Hot takeaway food
  • Theatres
  • Fairs, Circuses
  • Amusement Parks
  • Concerts
  • Museums
  • Zoos
  • Cinemas
  • Studio or Factory Tours
  • Botanical Gardens
  • Exhibitions
  • Similar Cultural Events and Facilities

Is the reduced rate applied to everything I sell?

If you operate an attraction, then the reduced rate of 5% only applies to entrance fees to the attractions listed. This doesn’t apply to other supplies (or sales) made during the visit to your attraction such as souvenirs.

However, there is slight grey area here: if the goods are part of the admission fee and incidental to the entrance fee, then the full fee charged will qualify for the reduced VAT rate of 5%.

What about alcohol and sporting events?

Unfortunately the reduced rate of VAT does not apply to served alcoholic drinks and does not apply to entry into sporting events.