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The temporary cut to the rate of VAT on food, accommodation and entry fees to attractions from 20% to 5%, introduced on 15 July 2020, is extended by Finance Act 2021 until 30 September 2021.

An increased reduced rate of 12.5% will apply 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:

VAT on accommodation and attractions: 5% rate

From 15 July 2020 to 3 September 2021 (extended from 12 January 2021 and 31 March 2021), a 5% rate of VAT will apply to supplies of:

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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