Hospitality Industry VAT Rate Increase – 1st October 2021

In July 2020, the VAT rate for the tourism and hospitality sector was temporarily reduced to 5%, from 20%. The businesses that were able to take advantage of the reduced rate include;

  • Hotels
  • Restaurants
  • Hot take-away food
  • Non alcoholic drinks sold in cafes, bars and restaurants.

From the 1st October 2021, the VAT rate will increase from 5% to 12.5% (before increasing again back to the standard rate of 20% from 1st April 2022).

For those who are currently benefitting from the reduced VAT rate it may be beneficial, if cash flows and storage allow it, to bulk buy stock for the following months whilst taking advantage of the 5% reduced rate before the increase.

Go Local

Whilst the rates are reduced, this is a fantastic opportunity to go local and explore the Café’s & restaurants you have around you, whist saving some money on your meal.

If you’re spending £105 on a family meal out at the moment, this will increase to £112.50 from 1st October (and £120 from 1st April 2022) so why not try local whilst paying less.