Last updated: 14 October 2026
How did the temporary VAT rate affect businesses, and does it still apply?
No, it no longer applies. The temporary reduced VAT rate for hospitality, holiday accommodation and admission to attractions ran from 15 July 2020 to 31 March 2022. It was 5% until 30 September 2021 and 12.5% from 1 October 2021, then the standard 20% returned on 1 April 2022. If your business made these supplies, the main questions now are getting old returns right and handling any future rate change correctly.
The timeline
| Period | Rate for eligible hospitality, accommodation and attractions |
| Before 15 July 2020 | 20% |
| 15 July 2020 to 30 September 2021 | 5% |
| 1 October 2021 to 31 March 2022 | 12.5% |
| From 1 April 2022 | 20% |
What qualified
- Food and non-alcoholic drinks for eating on the premises, and hot takeaway food and hot non-alcoholic drinks
- Holiday accommodation, such as hotels, B&Bs, caravan pitches and campsites
- Admission to attractions such as theatres, zoos, museums and theme parks, where not already exempt
Alcoholic drinks were always standard-rated and were never included.
How it affected businesses
Businesses had to update tills, menus and booking systems three times in under two years. Many kept prices the same and kept the VAT saving as extra margin, which helped cash flow after lockdowns. Others passed it on to customers. Bookings that straddled the change dates needed care: the tax point decided the rate.
Example
A hotel took a £600 deposit in August 2021 for a stay in November 2021. The deposit created a tax point at 5%, so VAT was £28.57. The balance of £600, paid at check-out in November, had a tax point at 12.5%, so VAT was £66.67.
Flat rate scheme users
HMRC reduced the flat rate percentages for catering, accommodation and pubs during the same periods. For example, the catering rate fell from 12.5% to 4.5%, then 8.5%, before returning to 12.5%.
Checking old returns
If you’re reviewing a return from 2020 to 2022, check:
- That standard-rated items, such as alcohol, weren’t put through at the reduced rate
2. That the right rate was used around 30 September 2021 and 31 March 2022
3. That the correct flat rate was used, if you were on the scheme
You can correct errors on a later return if they are under the error correction threshold and within the 4-year time limit. Errors from early 2022 will soon fall outside that limit.
If rates change again
The same principles apply to any future change: update systems on the change date, use the tax point to decide the rate, and review contracts that cross the date.
Records for the reduced-rate period
Keep till reports showing how sales were split between rates, plus menus and booking records for each period. HMRC can still check them if the return is inside the time limits.
Frequently asked questions
Can I still charge 5% on hot food?
No. Hot takeaway food and eat-in meals are 20%.
Did takeaway coffee qualify?
Yes, hot non-alcoholic drinks were included.
Can I reclaim VAT I overpaid in 2021?
Only within the 4-year time limit.
Were cold takeaway sandwiches affected?
No, they were already zero-rated.
Related: changing invoices when VAT rates change and VAT on food and drink.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with VAT rate changes. See our VAT accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
