Today Rishi Sunak has announced that VAT for the hospitality and tourism sectors will remain at 5% until March 2021.

The temporary VAT reduction which Sunak announced in his summer ‘mini Budget’ took effect from 15 July 2020 and was due to finish on the 12 January 2021. It relates to certain supplies of hospitality, hotel and holiday accommodation, and admissions to some attractions. This was introduced in order to support businesses severely affected by forced closures and social distancing measures.

Samantha Daniels, Partner for Shaw Gibbs accountants and business advisers comments:

“I have a number of clients in the hospitality sector and the feedback on this announcement has already been positive. The fact is that that the ‘rule of six’ and now the earlier closures of pubs and restaurants will take its toll on them. The extension of the temporary reduced rate will continue to benefit the sector, particularly over the Christmas and New Year season which is expected to be significantly quieter than usual. It is important to note the reduced rate does not apply to alcoholic drinks and will therefore not be of benefit for pubs that do little or no food”