By Sean O’Sullivan
Included in the Finance Act 2021, the rate increase to 12.5% is the first step in the Government returning those services to the standard rate of VAT, with the 20% rate currently scheduled to resume on 1 April 2022.
However, the Chancellor has until this date to extend the rate cut, should he wish to do so.
The services this applies to are:
- Food and non-alcoholic beverages sold for on-premises consumption (for example, restaurants, cafes and pubs)
- Hot takeaway food and hot takeaway non-alcoholic beverages
- Sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents and associated facilities
- Admission to theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities (note that if any of these attractions are covered by the existing cultural exemption, the exemption will take precedence)
This advance notice should allow businesses to prepare their systems for the changes; however, businesses that require an advance or deposit payment should take extra care in determining what rate to charge and should seek advice if in any doubt.
For more information or to discuss your company’s VAT affairs, please contact Sean O’Sullivan.