As previously announced, the temporary reduced rate for the hospitality industry is increasing from 5% to 12.5% with effect from 1 October 2021. It will then remain at 12.5% until 31 March 2022 and revert back to 20% with effect from 1 April 2022.
There are no changes to the types of supply covered by the reduced rate which are as listed in the initial guidance from July 2020:
· food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
· hot takeaway food and hot takeaway non-alcoholic beverages
· sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities
· admissions to the following attractions that are not already eligible for the cultural VAT exemption such as:
· amusement parks
· similar cultural events and facilities
Normal tax points apply here with the rate of VAT being based on the earlier of the invoice date or payment date where these are earlier than the time of supply. It is therefore worthwhile businesses who can apply the reduced rate having a push and trying to get people to book and pay in advance before the end of September to make the most of the lower rate.