The reduced 5% rate of VAT that has applied for businesses in the tourism and hospitality sector since 15 July 2020 was due to end on 31 March 2021. The Chancellor announced in his Budget that this reduced rate has been extended up until 30 September 2021.
The reduced rate covers hospitality, holiday accommodation and attractions so will be a useful financial support for those businesses looking forward to open as the lockdown eases.
In addition, rather than reverting to the standard 20% from October the Chancellor has introduced a new 12.5% VAT rate for these businesses that will apply from 1 October 2021 until 31 March 2022. The rate will then revert to the standard 20% rate from April 2022.
If you have any questions about the reduced rate of VAT or its application, please get in touch.