On 8 July 2020, as an urgent response to the pandemic, the government announced a number of VAT measures including a temporary reduction of the VAT rate for the hospitality, hotel and holiday accommodation sectors as well as admission to certain attractions.
This VAT cut, from 20% to 5% was designed to boost customer demand in response to the economic crisis caused by the pandemic.
This cut in the VAT rate took effect from 15 July 2020.
In the spring 2021 Budget an extension to the 5% rate was announced until 30 September 2021 with the VAT rate for the sector increasing to 12.5% from 1 October 2021 until 31 March 2022.
The affected supplies which have benefitted from the reduced rates are:
Standard rate will apply from 1 April 2022
For businesses within the sector, the temporary rates have no doubt been a welcome measure but it’s soon coming to an end.
From 1 April 2022, the VAT rate for the sector will return to the standard rate – currently 20%.
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