12.5% VAT rate on food and non-alcoholic drinks reverts to 20%

We all had our fingers crossed that the 12.5% VAT rate on food and non-alcoholic drinks would continue beyond 1st April. But unfortunately, it didn't and has now reverted to 20%.

In July 2020, the government temporarily reduced the VAT rate to 5% for certain supplies within the hospitality sector. This was initially for a period of 6 months but was extended as the pandemic continued to hit these businesses hard. In the 2021 Budget it was announced that the 5% rate will end on 30th September 2021 and will be replaced with a new rate of 12.5% until 31st March 2022.

From 1st April 2022 the standard rate of 20% VAT is now applicable to supplies of hospitality, hotel and holiday accommodation and admissions to certain attractions and events. Businesses that currently apply the reduced rate must ensure that they are compliant with the VAT rate change to 20% from 1st April 2022. This may require businesses to make changes and refinements to their VAT accounting procedures and financial models.

If you are in the hospitality sector and would like any help or advice, you can contact us.