The UK Chancellor announced in his Summer Statement 2020 that he is to reduce the UK VAT rate for selected areas of the tourism and hospitality sector. This applies from 15 July 2020 through to 12 January 2021.
The VAT rate cut in the Summer Statement is part of the UK Government’s plan to help boost the economy especially in some of the sectors that have been hit the hardest. Therefore, the VAT rate will be reduced from 20% to 5% for the following specific areas:
- Food and non-alcoholic drinks in restaurants, pubs, and cafes;
- Accommodation in hotels and B&Bs; and
- Admissions to attractions such as theme parks and cinemas.
We are expecting additional guidance from HMRC on how these new reduced VAT rates will apply. In particular, whether the VAT rate cut applies to hot takeaway food. The treasury document did not specifically mention this.