The extension on the temporary reduced rate of VAT changed its percentage on 1st October 2021 from 5% to 12.5%. The new 12.5% VAT rate will then end on 31st March 2022.
Three categories of supplies are covered:
- Sales of food and drink
- Hotels and holiday accommodation
- Admission to attractions
Food and drink
The circumstances in which the reduced rate will apply to sales that would otherwise be standard-rated are:
- Food and drink to be eaten on the premises, or
- Food and drink supplied hot to be taken away.
- Cold takeaway food is not included because that would generally be zero-rated anyway, unless it was of products that are always standard-rated such as confectionery. Alcoholic drinks are excluded from the reduced rate and will remain standard-rated in all circumstances.
This will therefore apply to restaurants, pubs, cafés and take-aways.
Hotels and holiday accommodation
This includes sleeping accommodation in hotels, inns and bed & breakfast, holiday homes, caravan and campsites.
Admission to cultural and leisure attractions, where these are not already covered by the cultural exemption, will include theatres, cinemas, concerts, zoos, amusement/theme parks, fairs, circuses, exhibitions, shows, museums and similar cultural attractions. Sporting events are excluded, and the reduced rate only applies to admission charges and not separate charges once within the venue. HMRC also state that a charge to view a live performance online may also be eligible.
To find out more regarding the implications and economic impact of this reduced VAT rate, visit HMRC’s website here.
If your business is within one of the three categories mentioned above, and you have not been charging the reduced rate of VAT, please contact us immediately as you may be entitled to a VAT rebate.
Chippendale and Clark have experience in setting up till systems for pubs and restaurants, if your system is outdated and you require assistance, please contact the office on 01249 465 435 or 01793 378 586 to arrange an initial meeting for us to find out more about you and your business.
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