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The UK’s Tourism and Leisure industry has been granted a temporary VAT cut in an effort to help companies recover from the pandemic...
Information as of Wednesday 15 July 2020, 12pm UK
As highlighted in our overview of the UK Chancellor's Summer Statement, the UK's Tourism & Leisure industry has been granted a temporary VAT cut.
To help boost the economy and encourage consumer spending in the leisure and tourism sector, the UK Chancellor announced a temporary cut in the VAT rate to 5% for certain supplies. Any businesses caught by the change needs to take immediate action.
The reduction will apply from 15 July 2020 to 12 January 2021. Early guidance issued by HM Revenue & Customs (HMRC) suggests only the following specific supplies will be able to take advantage of the change:
For many businesses, the switch should be relatively pain free and they can start charging VAT at the new rate from 15 July on the relevant sales; however, for businesses like hotels that often require an advance payment, the correct treatment will require additional thought and you should seek advice if in any doubt.
It has been some time since the last VAT rate reduction in the UK. The intention then was to boost spending by consumers, but the reality was that businesses did not pass on the reduction and kept the increased profits. It remains to be seen what the outcome is this time around.
The Summer Statement also announced the “Eat Out To Help Out” voucher scheme for the month of August 2020. Businesses should be aware that VAT is due on the full price of the meal and not the reduced amount after applying the voucher.
For more information or to discuss your company's VAT affairs, please contact Jamie or Sean:
Tel: +44 (0)20 7430 5889
Tel: +44 (0)20 7430 5966