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UK VAT Rate Cuts in Hospitality and Tourism Extended

This week, HMRC extended its UK VAT rate cuts on hospitality and tourism to the 31 March 2021. Originally the VAT rate cut would be granted till 13 January 2021 but will now be extended by a further two months. 

The lowered VAT Rates have been in effect since 15 July 2020 and were slashed by a whopping 15% from 20% to 5% and comes at a cost of £4 billion to the UK government.

The lowered VAT rate is applied to both eat-in and takeout food, accommodation and attractions. Its goals are to provide relief to the suffering hospitality industry and to assist in securing jobs in the sector. 

The UK VAT Rate Cuts Cover the following:  

  • Restaurants; 
  • cafes; 
  • pubs (ex alcohol); 
  • All forms of accommodation
  • Take away food
  • Entrance fees for entertainment outings such as theatre, fairs, museums amusement parks and concerts etc. 

(source)

Continued Relief

The news of the extension will be welcomed by both the public and the hospitality sector. 

As Chancellor Rishi Sunak pointed out in July, the initiative combined supports over 2.4 million staff across 150,000 businesses. The VAT cut alone is set to save households around £160 per year. 

According to Sunak, 80% of hospitality firms stopped trading in April and 1.4 million hospitality workers have been furloughed under the Coronavirus Job Retention Scheme – the highest proportion of any sector. (source)

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