On 15th July 2020, as part of the government’s measures to help businesses affected by the COVID-19 pandemic, HMRC announced a temporary reduction to the rate of VAT for hospitality, holiday accommodation, and attractions industries.
Until 30th September 2021, this was set at a reduced rate of 5%.
From 1st October 2021, a new reduced rate of 12.5% will apply.
This will remain in effect until 31 March 2022, and then the standard rate of 20% is due to return from 1 April 2022.
Assuming your prices include VAT, for a sale of £500, the output VAT owed to HMRC would be as follows:
15th July 2020 to 30th September 2021 – £23.80
1st October 2021 to 31st March 2022 – £55.55
From 1st April 2022 – £83.33
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