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VAT Increase for Hospitality Businesses

VAT Rate Increase

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As businesses up and down the country progress on recovering lost trade, HMRC will be implementing the first phase of a VAT Increase for Hospitality Businesses effective from 1st October 2021.

Is your business affected by the VAT Increase? Read on to find out more….


It was in July 2020 that the existing VAT rate was slashed to 5% on food, accommodation and entry fees to attractions.

This was to help businesses affected by the enforced closure and tighter restrictions due to the COVID-19 pandemic.

For more information on the reduced VAT rate, visit HMRC.

VAT Increase Rates

This is not the end of the VAT Increases, as mentioned in the amended Finance Act 2021.

The VAT rate for all affected businesses will increase from 5% to 12.5% from 1st October 2021 and will continue until 31st March 2022.

From 1st April 2022 it will increase again returning back to the standard rate of 20%, bring all hospitality businesses inline with the rest of the country.

What if recovery is slow?

There is a possibility that the reduced VAT rate may be extended to cover a longer period.

However this depends on the recovery plan of business in general.

The Chancellor could apply Treasury Regulations to amend the temporary clauses included in the FA2021 if there is evidence that recovery is not fast enough.

Supplies affected by the rate increase

In brief, the reduced VAT rate applies to the supplies of the following:

  • Admissions to attractions that are not already eligible for the cultural VAT exemption including:
    • Theatres
    • Circuses and fairs
    • Amusement park
    • Concerts
    • Museums and exhibitions
    • Zoos
    • Cinemas
  • Sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities.
  • Hot takeaway food and hot takeaway non-alcoholic beverages.
  • Food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs.

It does not apply to sporting events, or to alcoholic drinks which continue to be standard rated at 20%.

How Onyx Accountants Can Help You

Do you know how this VAT rate increase will affect your business? Maybe you are unsure how your business will be able to pay your next VAT bill.

At Onyx Accountants and Business Advisors, we have a dedicated team of Tax Specialists and Advisors. They know everything there is to know about VAT and MTD! We are experts in reviewing vatable supplies and understanding HMRC’s tax rates and rules! So let us do all the hard work leaving you to run your business.


If you have any queries, or want to discuss further, please give us a call or e-mail us at for a FREE no obligation consultation.

Got any questions or queries? If you have then our friendly team of tax specialists are happy to help. Just drop us a line! Call us on 0121 753 5522 or 01902 759 800.

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