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VAT Rate Changes Approaching for the Hospitality Sector

LHP - Farming update

Author: Senior Client Manager Cerith Williams (FCCA)

Cerith

The temporary VAT rate of 5% for the hospitality, holiday accommodation and attractions sectors is being replaced from 1 October 2021 with a new rate of 12.5%. This new rate applies until 31 March 2022 when it goes back to the standard 20% rate.

Who is likely to be affected?

Businesses that make certain supplies relating to hospitality, make supplies of holiday accommodation or charge for admission to certain types of attractions. If you have been using the 5% rate of vat you need to adjust your systems to calculate vat on the new rate.

Action to take

If you are a VAT registered business you must check if you can temporarily reduce the rate of VAT on supplies relating to hospitality, accommodation, or admission to certain attractions.

Hospitality/Leisure

Food and non-alcoholic beverages on premise usually required to charge standard 20% VAT rate for example restaurants, cafes and pubs were given a reduced rate between 15 July 2020 and 31 March 2021 of 5% VAT. The reduced rate of VAT applied also to supplies of hot takeaway food and hot takeaway non-alcoholic drinks. More at Gov Wales 

From the 1st October you will need to increase your reduced rate to 12.5%.

Hotel/Holiday Accommodation

You will also benefit from the temporarily reduced rate for supply sleeping accommodation in a hotel or similar establishment, certain supplies of holiday accommodation, fees for caravan pitches and associated facilities and charge fees for tent pitches or camping facilities. More at Gov Wales 

From the 1st October you will need to increase your reduced rate to 12.5%.

Attractions

Be mindful to increase your VAT in October to 12.5% if you are currently on a reduced rate. For the full details including the Flat Rate Scheme, The Tour Operators Margin Scheme, Retail Schemes and Accounting for supplies that straddle the temporary reduced rate see more at Gov Wales 

Let’s Talk

For help with your VAT, please don’t hesitate to contact our team at LHP who will be more than happy to help you. Let’s talk.

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