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The VAT reduction to 5% is here

The promised cut in the VAT rate from the standard rate of 20% to 5% will take effect from today, 15 July 2020 to 12 January 2021. The government has introduced a temporary 5% reduced rate of VAT for certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions.

This is welcome news for Northern Ireland hospitality in particular. Northern Ireland is at a greater disadvantage than most, as the Revenue Commissioners in the Ireland saw the potential for a reduced rate of VAT in helping to grow the sector years ago. Ireland currently charges 13.5% (recently increased from 9%) VAT on supplies of hospitality and tourism so their industry has been at an advantage to Northern Ireland since 2012.

The following supplies will benefit from the temporary 5% reduced rate of VAT:

  • food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs

  • hot takeaway food and hot takeaway non-alcoholic beverages

  • sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities

  • admissions to the following attractions that are not already eligible for the cultural VAT exemption such as:

    • theatres

    • circuses

    • fairs

    • amusement parks

    • concerts

    • museums

    • zoos

    • cinemas

    • exhibitions

    • similar cultural events and facilities

Check to ensure your accounting system is adjusted to apply the lower VAT on sales during the period. For online accounting systems the majority appear to be ready for the change but you do need to amend the rates yourself. They are NOT automatically applied.

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