The Government cut the rate of VAT for certain supplies relating to the hospitality industry to a temporary 5% rate in July 2020, to assist those businesses severely affected during lockdown.
This reduced rate was extended until 30 September 2021 in this year’s Budget.
As of 1 October 2021, this rate has increased to a new reduced rate of 12.5%, to aid the transition back to the standard rate of VAT (20%).
The standard rate of VAT is set to apply from 31 March 2022.
This new measure has been implemented in order to provide further support to the cash flow and viability of businesses following multiple periods of closure throughout the Coronavirus pandemic. The Government predicts this will enhance the experience of customers eating out, buying hot takeaways, staying in hotels and visiting many attractions.
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