VAT cut extension details

Chancellor Rishi Sunak has announced the current VAT cut will be extended until March 2021 for tourism and hospitality businesses, as he announced his Winter jobs Plan in the Commons.

The 20% rate was granted a six month reduction in July as an urgent response to the pandemic to support businesses and jobs in the hospitality sector across the UK who have been severely affected by forced closures and social distancing measures.

VAT cut would help ‘support more than 150,000 businesses’

The temporary 5% rate was due to run until January 13, 2021. Now, it will continue until March 31, 2021. You’ll see the discount applied at the checkout – where value added tax will be down from 20% to 5%.

‘This will give businesses in the sector – which has been severely impacted by the pandemic – the confidence to maintain staff as they adapt to a new trading environment,’ Sunak told MPs.

Where the VAT cut applies

The cut applies to many supplies in the hospitality and tourism industry, such as restaurants, cafes and pubs, hotels, B&Bs, campsites and caravan sites. It will also include venues and attractions such as cinemas, theme parks and zoos, however, while the temporary lower rate applies to non-alcoholic drinks, it does not apply to alcoholic ones.

Hot takeaway food and hot takeaway non­ alcoholic beverages from the business will be included, along with sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated        facilities.

Admissions to the following attractions also benefit, such as:

• Theatres
• Circuses
• Fairs
• Amusement parks
• Concerts
• Museums
• Zoos
• Cinemas
• Exhibitions
• Similar cultural events and facilities