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VAT Cut In Hospitality Sector

8 July 2020

COVID-19

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The Chancellor today announced that the VAT rate in the hospitality and tourism sector will be cut from 20% to 5% from 15 July 2020 to 12 January 2021.

The reduced rate will apply to sales of food, accommodation and admission to attractions including ;

  • Eat-in and hot takeaway food from restaurants, cafes and pubs and similar premises;
  • Accommodation and catering in hotels, B&Bs, campsites and caravan sites;
  • Attractions such as cinemas, theme parks and zoos and similar establishments.

Businesses will need to be aware that as from 15 July any premises serving alcohol will have to deal with three different rates of VAT: one for alcohol at 20%, one for cold take-away food at 0% and 5% for everything else.

There is no retrospective reduction of VAT charged at 20% on deposits paid before 15 July, as the VAT tax point is the date of payment of the deposit.

The Government has not yet issued full guidance and the scope of this relief will be published by HMRC in the coming days. We will monitor this position and advise further.

 

Eat Out to Help Out £10 Restaurant Discounts

The Chancellor announced that diners are to be given a 50% discount of up to £10 per head on their meal at participating restaurants, pubs and cafes, or similar establishments in August. The discount applies to eat-in food including non-alcoholic drinks. The conditions are;

  • The business has to register with HMRC through a simple website opening on Monday 13 July
  • The meals must be eaten from Monday to Wednesday and will be 50% off up to a maximum discount of £10 per head for everyone.  
  • The business can then claim the discount value from the government, who have promised that the funds will be sent to the businesses bank account within five working days.

The Government has not yet issued full guidance and the scope of this relief will be published by HMRC in the coming days. We will monitor this position and advise further.

 

Zero rate PPE to be extended

A temporary zero rate for sales and imports of Personal Protective Equipment (PPE) was introduced in the UK from 1 May to 31 July.  HMRC announced today an extension for a further 3 months to the end of October 2020.  The products include;

  • disposable gloves
  • disposable plastic aprons
  • disposable fluid-resistant coveralls or gowns
  • surgical masks – including fluid-resistant IIR surgical masks
  • filtering face piece respirators
  • eye and face protection – including single or reusable full face visors or goggles. Basic face masks are not covered by the zero rate.