Hospitality and Tourism VAT Rate Increases to 12.5%
From 1 October 2021, the temporary reduced VAT rate for hospitality and tourism increased from 5% to 12.5%. This intermediate rate will remain in place until 31 March 2022, at which point it will return to the standard rate of 20%.
Timeline: The reduced 5% rate applied from 15 July 2020 to 30 September 2021. The 12.5% rate applies from 1 October 2021 to 31 March 2022. The standard 20% rate returns from 1 April 2022.
Who Is Affected?
The temporary reduced rate applies to supplies of:
- Food and non-alcoholic beverages sold for on-premises consumption (restaurants, cafes, pubs)
- Hot takeaway food and hot takeaway non-alcoholic drinks
- Sleeping accommodation in hotels, B&Bs, and holiday lets
- Admission to attractions such as theatres, cinemas, amusement parks and zoos
What You Need to Do
Update Your Accounting Software
Ensure your VAT codes and rates are updated to reflect the new 12.5% rate from 1 October.
Update Your Till Systems
Point-of-sale systems need to be reconfigured to apply the correct VAT rate to eligible items.
Review Your Pricing
Decide whether to absorb the increase or pass it on to customers and update your price lists accordingly.
Check Your VAT Returns
Ensure your next VAT return correctly accounts for the change in rate, particularly for the transition period.
Cloud Bookkeeper handles VAT returns for businesses on our Gold and Platinum packages. We ensure the correct rates are applied and your returns are filed on time. Get in touch.