Temporary VAT cut to boost hospitality sector

The Chancellor has announced a temporary cut in the rate of VAT on specific goods and services from 20% to 5% between 15 July 2020 and 12 January 2021 to assist the hospitality and tourism sectors as they emerge from the Coronavirus lockdown.

The cut in the VAT rate will apply to café, pub and restaurant food, accommodation and admission to certain “attractions”.  Exact details will be released in advance of this change coming into force next week.

For the moment, we know that the food can be taken away or eaten in and must be purchased from a restaurant, cafe or pub. The accommodation can be at a hotel, B&B, caravan park or campsite and the specific attractions included so far are cinemas, theme parks and zoos.  

HMRC have also confirmed that the rate cut will apply to soft drinks purchased with food, but not to alcohol. 

The re-configuration work required to electronic point of sale and other financial software will place an additional burden on businesses already dealing with the health and safety and administrative issues resulting from the continuing restrictions.

We will be issuing a further update once the relevant guidance is available, but in the meantime if you have any questions, please get in touch with your usual RG contact.   

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