The reduced VAT rate only applies to certain supplies in the hospitality industry, hotel and holiday accommodation and also admission to certain attractions.
It applies from the 15th July 2020 to 12th January 2021.
On 8 July 2020, the government announced that it would introduce a temporary 5% reduced rate of VAT for certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions.
This cut in the VAT rate from the standard rate of 20% down to 5% will have effect from 15 July 2020 to 12 January 2021.
The following supplies will benefit from the temporary 5% reduced rate of VAT:
Anyone currently using the flat rate scheme needs to be aware that some of the % used has reduced to be in line with the reduction to 5%.
Most Xero accounts will already have a 5% VAT rate set up as this is a rate already in use for other supplies. If you need to set up a new VAT rate in Xero you can follow these steps:
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