New Hospitality Reduced VAT Rate

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Following on from the government’s announcement last July, a new rate of VAT for the Hospitality Industry is being introduced.

The temporary VAT rate for the hospitality, holiday accommodation and attractions sectors is coming to an end and will be replaced from 1 October 2021 with a reduced rate of 12.5%.

The government initially introduced the temporary 5% reduced rate of VAT back in July 2020 and this was intended to last until January 2021. But it was then subsequently extended until March 2021.

As part of the 2021 Budget, it was confirmed that the reduced rate would be further extended, this time until 30 September 2021.

What is changing?

The new rate of 12.5% will be introduced on 1 October 2021 and will remain in place until 31 March 2022 to support the transition back to the standard rate of VAT (20%). This new rate affects:

  • Supplies of food and non-alcoholic drinks for consumption on premises from restaurants, pubs, bars, cafes and similar premises in the UK.
  • Supplies of hot takeaway food and hot takeaway non-alcoholic drinks.
  • Supplies of hotel and holiday accommodation and admission to certain attractions in the UK.

Where can you get more information?

  • If you are a Sage user please click here to access Sage UK’s knowledge base full of resources. Alternatively you can find out more about the changes on
  • If you are looking for more information regarding completing these VAT changes in Sage 200 then please take a look at our previous article or watch our tutorial.

If you have any questions about the New Hospitality Reduced VAT Rate or how this affects your Sage system, please fill out the enquiry form or call 01332 959 008.

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