In July 2020 the government introduced a temporary 5% reduced rate of VAT for certain supplies relating to hospitality, hotel and holiday accommodation, such as:

• Supplies of food and non-alcoholic drinks for consumption on premises from restaurants, pubs, bars, cafes and similar premises in the UK.
• Supplies of hot takeaway food and hot takeaway non-alcoholic drinks.
• Supplies of hotel and holiday accommodation and admission to certain attractions in the UK

This reduced rate of 5% is to be replaced with a new reduced rate of 12.5% on 1^st October 2021. This new reduced rate of 12.5% is set to be in effect until 31^st March 2022. These changes will affect businesses such as restaurants, pubs, bars, cafes & other similar premises within the UK, suppliers of accommodation and attractions within the UK and any VAT registered business which makes purchases from the suppliers mentioned above.

Initially the reduced rate of 5% was introduced as a response to the impacts that the coronavirus pandemic was having on businesses within the hospitality industry. The main objective of the new temporary rate of 12.5% is to assist businesses with the transition back to the standard rate of VAT (20%)

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