UK 20% tourism & hospitality VAT rate returns 1st Apr 2022

COVID-19 hospitality VAT rate cut introduced in July 2020 now withdrawn

The UK temporary Value Added Tax rate cut on hospitaliy and tourism  has now ended, with the sector now returning the standard VAT rate of 20%. The pandemic cut to support hotels, catering and hospitality operated over to phases:

1. 5% between 15 July 2020 and 30 September 2021 (an extension from the planned 12 January 2021 withdrawal); and
2. 12.5% 1 October 2021 and 31 March 2022. It has now returned to 20%

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What UK tourism and hospitality services benefited from the VAT cut?

Restaurants; cafes; pubs (ex alcohol); hospitality; hotels; B&B’s; home rental; caravan and tent sites; hot take away food; theatres; fairs; circuses; amusement parks; concerts; museums; zoos; cinemas; studio or factory tours; botanical gardens; exhibitions; and similar cultural events and facilities. The reduction only applied on entrance fees to the attractions listed; not other supplies provided during the visits such as souvenirs.

Note: served alcoholic drinks did not benefit from the cut. It excluded entry into sporting events.

Services subjected to tourism VAT reduction per HMRC:

• sleeping accommodation in:
  • hotels;
  • inns; and
  • boarding houses and similar establishments;
• granting of a license to occupy holiday accommodation and charges for:
  • seasonal pitches for caravans, including supplies of facilities provided in relation to the occupation of the pitches; and
  • pitches for tents and camping facilities;
• hot and cold food for consumption on the premises on which they are supplied;
• hot and cold non-alcoholic beverages for consumption on the premises on which they are supplied;
• hot takeaway food for consumption off the premises on which they are supplied; and
• hot takeaway non-alcoholic beverages for consumption off the premises on which they are supplied.

Countries such as the Germany, Lithuania and the Belgium are now in the process of withdrawing their tourism and hospitality VAT rate cuts introduced during COVID-19 crisis.

Future global VAT / GST changes