Back in October 2020, we reported the VAT rate cut for the hospitality sector, and we now have a recent update regarding this. The good news is that this has been extended to the 31st of September 2021, but from here, it will begin to increase.

What Does The VAT Rate Update Mean For The Hospitality Sector?

It has now been a year since hospitality venues were forced to close and, under the COVID-19 restrictions, are still unable to reopen until later in the year. Back in July 2020, the Government implemented a 15% VAT reduction on most sales, meaning that instead of the usual 20% in VAT, companies would only have to pay 5%.

As mentioned above, the 5% VAT rate will continue until the 31st of September 2021. However, it will begin to gradually increase with sales made from the 1st of October 2021 to the 31st of March 2022. A 12.5% increase will be added before returning to the usual 20%.

The reduced VAT rates cover many aspects, such as:

  • Restaurant meals
  • Hot takeaway meals
  • Hotels and accommodation
  • Entrance fees for tourist attractions and cultural venues

However, it does not apply to tickets to sporting events, admission to sporting facilities or soft drinks taken with a restaurant or café meal eaten in-house.

Nevertheless, a special low rate has been applied to gross sales under the VAT at rate scheme for small businesses, which will be revised to consider the 12.5% rate that applies until the 31st of March 2022. Venues that would benefit from this include pubs, hotels and catering services.