C-19 Self-employment income support scheme (SEISS)

C-19 Deferring Income Tax payments

COVID-19: Coronavirus Reduced rate VAT - Updated: 14 April 2021

The temporary cut to the rate of VAT on food, accommodation and entry fees to attractions from 20% to 5%, introduced on 15 July 2020, is extended by Budget 2021 until 30 September 2021.

The reduction is one of a number of additional measures announced to support the economy as the COVID-19 pandemic continues to affect individuals and businesses.

What's new?

Budget 2021

• The temporary reduced rate of VAT (5%) applying to goods and services supplied by the tourism and hospitality sector is extended to 30 September 2021.
• A 12.5% rate of VAT will apply between 1 October 2021 and 31 March 2022, before reverting to the standard (20%) rate.

Summer 2020 measures

VAT on food and non-alcoholic drinks

From 15 July 2020 to 12 January 2021, to support businesses and jobs in the hospitality sector:

• A 5% rate of VAT applies to supplies of:
  • 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.
• Alcoholic drinks will remain subject to the standard 20% rate.
• Food and drink supplied as part of a supply of catering services for consumption off-premises continue to be standard rated.

 

VAT on accommodation and attractions

From 15 July 2020 to 12 January 2021, a 5% rate of VAT will apply to supplies of:

• 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:
  • Theatres
  • Circuses
  • Fairs
  • Amusement parks
  • Concerts
  • Museums
  • Zoos
  • Cinemas
  • Exhibitions
  • Similar cultural events and facilities
• Where admission to these attractions is covered by the existing cultural exemption, the exemption will take precedence.
• It does not apply to sporting events.
• Where goods are part of the admission fee and are incidental to the main supply, the whole supply is eligible for the temporary reduced rate, for example a brewery tour with an incidental supply of food and drink.

In both cases where the Flat Rate Scheme (FRS) applies the relevant FRS rate will also be temporarily reduced.

Useful guides on this topic

Summer Economic Update: At glance

Chancellor of the Exchequer, Rishi Sunak, made his update on Wednesday 8 July 2020. We outline his new measures designed to assist in reviving jobs and the economy following the outbreak of the Coronavirus.

COVID-19: Government support tracker

This tracker covers measures announced by the government to support individuals and businesses, as we get through COVID-19.

COVID-19: VAT payments

COVID-19 VAT payment deferral measures for VAT registered business.

Food: Catering and takeaway

There is sometimes confusion as to how food is treated for VAT purposes. If the food is purchased from a supermarket, one rule may apply. If the same food is bought from a café a different rule could apply.

External links

A Plan for Jobs 2020: Policy paper

Guidance: VAT: reduced rate for hospitality, holiday accommodation and attractions

HMRC Guidance: Catering, takeaway food (VAT Notice 709/1)

Revenue & Customs Brief 10 (2020)