VAT Changes in Budget 2021

The government announced a number of VAT measures including a temporary reduction to the Standard Rate of VAT from 20% to 5% for the hospitality sector.

The 5% rate of VAT now applies until 31 September 2021. From 1 October 2021 the hospitality sector VAT rate is due to increase to 12.5% until to 31 March 2022, after which time it is due to return to the standard rate, currently at 20%.

Changes that temporarily introduce a 5% reduced rate on supplies of:

• Hot and cold food for consumption on the premises on which they are supplied
• Hot and cold non-alcoholic beverages for consumption on the premises on which they are supplied
• Hot takeaway food for consumption off the premises on which they are supplied
• Hot takeaway non-alcoholic beverages for consumption off the premises on which they are supplied.

A new Recovery Loan Scheme will be launched to replace the existing government guaranteed schemes which have supported £73 billion of lending to date and close at the end of March.