VAT rate reduction for hospitality and the flat rate scheme

16 July: VAT flat rates have been reduced for catering, accommodation and pubs in light of the government’s temporary VAT reduction.

As a consequence of the temporary reduction in the VAT rate from 20% to 5% in the hospitality sector, the flat rate percentages used for catering (including restaurants and takeaways), accommodation and pubs have also been reduced from 15 July to 12 January 2021.

Updated government guidance confirms the new rates as:

Type of business  Flat rate (%) from 15 July 2020 to 12 January 2021 Flat rate (%) up to 14 July 2020 and from 13 January 2021
Catering services including restaurants and takeaways  4.5 12.5
Hotel or accommodation 0 10.5
Pubs 1 6.5

The legislation for the changes can be found in The Value Added Tax (Reduced Rate) (Hospitality and Tourism) (Coronavirus) Order 2020.

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