The temporary cut to the rate of VAT on food, accommodation and entry fees to attractions from 20% to 5%, introduced in July 2020, is extended by Finance Act 2021 until 30 September 2021.

An increased reduced rate of 12.5% applies between 1 October 2021 and 31 March 2022. 

VAT on food and non-alcoholic drinks: 5% rate

From 15 July 2020 to 30 September 2021 (extended from 12 January 2021 and 31 March 2021), to support businesses and jobs in the hospitality sector:

  • A 5% rate of VAT applies to supplies of:
    • 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.
  • Alcoholic drinks remain subject to the standard 20% rate.
  • Food and drink supplied as part of a supply of catering services for consumption off-premises continue to be standard rated.

VAT on accommodation and attractions: 5% rate

From 15 July 2020 to 30 September 2021 (extended from 12 January 2021 and 31 March 2021), a 5% rate of VAT applies to supplies of:

  • 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:
    • Theatres
    • Circuses
    • Fairs
    • Amusement parks
    • Concerts
    • Museums
    • Zoos
    • Cinemas
    • Exhibitions
    • Similar cultural events and facilities
  • Where admission to these attractions is covered by the existing cultural exemption, the exemption will take precedence.
  • It does not apply to sporting events.
  • Where goods are part of the admission fee and are incidental to the main supply, the whole supply is eligible for the temporary reduced rate, for example a brewery tour with an incidental supply of food and drink.

In both cases where the Flat Rate Scheme (FRS) applies the relevant FRS rate will also be temporarily reduced.

Position from 1 October 2021

Finance Act 2021 provides that a 12.5% rate of VAT will apply between 1 October 2021 and 31 March 2022, before reverting to the standard (20%) rate.

Useful guides on this topic

Summer Economic Update: At glance
Chancellor of the Exchequer, Rishi Sunak, made his update on Wednesday 8 July 2020. We outline his new measures designed to assist in reviving jobs and the economy following the outbreak of the Coronavirus.

COVID-19: Government support tracker
This tracker covers measures announced by the government to support individuals and businesses, as we get through COVID-19.

COVID-19: VAT payments
COVID-19 VAT payment deferral measures for VAT registered business.

Food: Catering and takeaway
There is sometimes confusion as to how food is treated for VAT purposes. If the food is purchased from a supermarket, one rule may apply. If the same food is bought from a café a different rule could apply.

External links

A Plan for Jobs 2020: Policy paper 

Guidance: VAT: reduced rate for hospitality, holiday accommodation and attractions

HMRC Guidance: Catering, takeaway food (VAT Notice 709/1)

Revenue & Customs Brief 10 (2020)  

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