The New VAT Rate For Hospitality Businesses – All You Need To Know

The new VAT rate for registered businesses on supplies related to hospitality will commence on 1st October 2021, moving on from the temporary reduced rate which came into effect from the 15th July 2020. The temporary reduced rate offered registered businesses a reduced rate of 5% VAT payable, in relation to the impact of COVID-19 on the hospitality industry.

The reduced rate, and new VAT rate from 1st October 2021, affect registered businesses who purchase supplies related to:

  • hospitality
  • hotel and holiday accommodation
  • admissions to certain attractions

The temporary reduced rate of 5% applies to supplies that are made between 15th July 2020 and 30th September 2021. As of 1st October 2021, the new rate of 12.5% will come into effect, which is scheduled to end on 31st March 2022.


What Is The VAT Reduced Rate For Hospitality Supplies? 

The VAT reduced rate offers businesses who acquire hospitality services to reduce their VAT bill. Between 15th July 2020 to 30th September 2021, all supplies were charged at a decreased rate of 5%. These changes were introduced as an urgent response to the coronavirus (COVID-19) pandemic, to support businesses severely affected by forced closures and social distancing measures. As of 1st October 2021, the VAT reduced rate will slightly increase to 12.5% for registered businesses who purchase hospitality supplies or services.

Alcoholic beverages and entry into sporting events are not covered under the reduced rate.

With over 150,000 businesses in the hospitality and tourism industry, totalling over 2.4 million jobs, the reduced rate was designed to offer a helping hand during the challenging economic consequences attributed to the pandemic.


Who Does The VAT Reduced Rate For Hospitality Supplies Affect?

If a business supplies food and non-alcoholic beverages for consumption on their premises, for example, a restaurant, café or pub, they’re usually required to charge VAT at the standard rate of 20%. However, when they make these supplies between 15th July 2020 and 30th September 2021, they will only need to charge 5%. This rises to 12.5% from 1st October to 31st March 2022.

Registered businesses are also able to charge the reduced rate of VAT on supplies of hot takeaway food and hot takeaway non-alcoholic drinks.

Businesses will also benefit from the temporary reduced rate if they:

  • supply sleeping accommodation in a hotel or similar establishment
  • make certain supplies of holiday accommodation
  • charge fees for caravan pitches and associated facilities
  • charge fees for tent pitches or camping facilities

As well as this, if a business charges a fee for admission to certain attractions, where the supplies are currently standard rated, they will only need to charge the reduced rate of VAT between 15th July 2020 and 30th September 2021. This rises to 12.5% from 1st October to 31st March 2022.

However, if the fee charged for admission is currently exempt, that will take precedence and supplies will not qualify for the reduced rate. It’s also worth noting if a small business uses the Flat Rate Scheme to simplify VAT calculations, they should be aware that certain percentages have been reduced in line with the introduction of the temporary reduced rate of VAT.


How To Comply With The VAT Reduced Rate?

All supplies made in relation to hospitality should be outlined in the VAT returns to HMRC. For businesses, this is usually submitted every three months.


We hope this has outlined to you the VAT reduced rate and all information related to the new rate which comes into effect on 1st October 2021. If you require any more information on VAT, or anything accounting related for that matter, please do not hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.


Beyond Accountancy

At Nordens, we're more than just accountants - we're business experts who can help you achieve your biggest goals.

Nordens Strategic

Our specialist strategic division at Nordens boasts some of the leading entrepreneurial business minds in the country. We cater towards delivering consistent success stories, whilst helping businesses achieve above and beyond their initial goals.

Through highly-tailored guidance, coaching and advice, Nordens Strategic are able to define exactly how your business can reach new levels of success.

Regardless of how you define ‘success’ for your business, our strategic service is guaranteed to bring about real and lasting change. By partnering with some of the UK’s top business coaches, we’ll steer you along the path to a greater future.

Accounting 2 You

Every business, no matter how big or small, needs to make the right decisions, and how to best manage your accounts can put huge question marks over your business. Accounting2You is here to take that pressure off and provide you with all the answers you need.

Our bookkeeping branch offers a fully inclusive, comprehensive service that you can trust. Since 2005, our specialist bookkeepers have been successfully managing the accounting of both individuals and small businesses.

With experts in payroll analysis, credit control and financial recording, Accounting2You will lead your business efficiently, and with real purpose, towards a prosperous future.

Voted as EXCELLENT - 9.9 out of 10 based on 167 reviews

Chris Dyer

Director - Metro Bank

Nordens are always very easy to deal with and extremely professional and efficient. I would have no hesitation in recommending them to my clients for their accountancy needs, no matter how complex they may be.

Read more reviews on Trust Pilot

Jamie Brown

Co-Founder - Chicmi Limited

Very good to work with - the team go above and beyond to make the accounts easy and efficient. They're all super friendly and a joy to work with.

Read more reviews on Trust Pilot

Simon Rose

Director - Rose Opticians

I have been using Nordens Chartered Accountants for 5 years and very happy with the service provided. All members of the team are very knowledgeable and have a wealth of experience which has proved very beneficial to my organisation

Read more reviews on Trust Pilot

Rebecca Bossick

Founder & Director - Physio LDN

Very easy to contact and put me in touch with the right person whenever I need to ask any questions. Extremely knowledgeable and can help me manage my various businesses whenever I need.

Read more reviews on Trust Pilot

James Aconley

Principal - Pauline Quirke Academy

Great accountants, always available to offer advice. The team have transformed my business.

Read more reviews on Trust Pilot

Christopher Wilce

Founder - Dataphone

Having worked with Nordens over the last 5 years, not only to look after my annual accounts but they have also provided outstanding professional advice. They have guided me through a Company share buyback with clear and objective advice. We have also been using Nordens strategic services for a couple of years, which has helped bring about significant improvements that exceeded my expectations. With experience of working with several local accountants over my 29 years in business, I’m very pleased with the service I have received from Nordens.

Read more reviews on Trust Pilot

Dave Hodges

Director - Linekers

Trusted our business with Nordens for over 10 years now and watched the company grow into the successful innovative business it has become today. Deservedly so. Every aspect of financial advice we need is always given promptly and with a smile. We have total confidence in all aspects of advice Nordens give. If you are looking for accountants, its a no brainer!

Read more reviews on Trust Pilot

Tony Charles

Founder - Foundation Sports Limited

A fantastic, modern, vibrant firm that care about the clients and their staff in abundance. It is rare to find an Accountancy firm with such vibrance and focus and relationships. It is no wonder they win award after award in their field.

Read more reviews on Trust Pilot

Peter Horlock

Managing Director - Prime Time Boilers

I have been with Nordens for many years now and they are a great accountants.

Read more reviews on Trust Pilot

Simon Cushing

Founder - Vivid Finishes

We have used Nordens for the last 5 years and have had a great service throughout. The guys are very passionate about what they do and have played a part in the growth of our company, highly recommended.

Read more reviews on Trust Pilot

Andrew Martin

Managing Director - AMD Interior Architecture

Great Service at Nordens from a friendly very approachable team Particularly Kirsty Willis and Joe Sword who have been helping us since we started the business in 2016.

Read more reviews on Trust Pilot

James Robinson

Director - Forma London

Nordens provide a first class service. We moved to Nordens last year and have been impressed with the level of service provided. Keep up the good work!

Read more reviews on Trust Pilot

Latest News

We've always got our ears to the ground when it comes to interesting, useful and topical information relating to business and accountancy.

Thinking Of Going On…
As UK travel slowly gets back to its feet and recovers from the crushing impact that the pandemic has caused on the industry, many of us are unsure of the particular tests, verifications and documents that are needed upon leavi...
Getting Your Inheritance Tax…
Getting your inheritance tax planning and will sorted can be a bit of a touchy, morbid subject for many but if there’s one thing the pandemic has taught us it is not to rest on your laurels. By securing your estate and assets, ...
Nordens TV

We love making videos that break down convoluted accountancy jargon into plain-talking, actionable and accessible facts.

Nordens Christmas Message 2021
On behalf of everyone here at Nordens, we want to you all a merry Christmas whilst looking back at some of the amazing achievements of the past year. From recruiting new staff, growing our client base, rubberstamping our client...
Live Webinar – Autumn…
The Chancellor of the Exchequer, Rishi Sunak, carried out his briefcase and laid out his Autumn Budget plans on Wednesday 27th October 2021. The Autumn Budget doesn’t usually attract massive attention, however, due to the econo...
  Why I Founded Nordens
Accounting 2 You

In November 2002, having sold our other business interests off earlier in the year, I decided to set up Nordens Chartered Accountants. The easy part was knowing how to do it, as I had established and built a smaller practice a few years earlier. The difficult part, for me, was not following the traditional accountancy path. Having run businesses, both successfully and unsuccessfully, I wanted to help business owners resolve their short term problems and work with them to achieve their longer term goals. Business has always been my interest and I love that I can help business owners achieve what seems like the impossible every single working day.

Mark Norden Signature

Mark Norden

We're Professionally Certified

Our limited company accountants have a range of qualifications from The Institute Of Chartered Accountants (ICAEW) to the Association of Chartered Certified Accountants (ACCA). We worry about the bye-laws, regulations and ethical guidelines of the ACCA so you don’t have to! That makes us an ACCA-accredited employer as well as a Professional Passport-accredited one!