From the 1st of April, hospitality tax VAT returns to its standard rate – of 20%

Since July 2020, hospitality tax was decreased to 12.5% to recover from the impact of the Covid-19 pandemic. This gave businesses the chance to become financially stable after the pandemic’s shocking implications, especially for smaller companies. 

In 2020, the reduction of hospitality tax was expected to boost cash flow and viability of businesses in the hotel, hospitality and tourism sectors. Yet inflation has risen. 

However, starting Friday the 1st of April, the 2020 reduction for trading businesses will increase to 20%, which is the standard rate. UKHospitality Chief Executive Kate Nicholls stated: “This is a real setback for thousands of UK hospitality businesses still suffering the devastating effects of Covid and facing a tidal wave of rising costs. For many businesses, removing the lifeline of a lower VAT rate might prove fatal…” and “Locking in VAT at 12.5% would have given hospitality businesses a major boost, and helped the sector in its ambition to lead the UK back to post-Covid prosperity.” 

If you have any concerns about how your business may be affected by the increase in tax, contact us for more support.