VAT changes – what, who and how will the 5% reduction affect you?

VAT changes – what, who and how will this affect your business?


  • First off, you will need to be in the hospitality or ‘attractions’ business.
  • Secondly, it does not cover alcoholic drinks.
  • Thirdly, it does not cover crisps or confectionery which are deemed ‘non essential’.
  • Fourthly, it does not relate to sporting events.
  • Cold takeaway food is already exempt from VAT so it only relates to hot food takeaway
  • BUT it affects hot and cold food if eaten in the place it is purchased.
  • The scheme is temporary, which means it is running for six months from 15th July to 12th January 2021.


What is included in the definition of an attraction?

Shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions, similar cultural events and facilities.

Admission to some facilities, such as public bodies and not-for-profit organisations, are already exempt from VAT under the cultural exemption. The exemption takes priority over the 5% rate.

What if we are already using the Flat Rate Scheme (FRS)?

You CAN opt out of that scheme to take advantage of the rate cut BUT there is a minimum period of 12 months before you can opt back in to the FRS. So once you leave the scheme for any reason, you must stay out for at least 12 months before you can rejoin. However, you can leave part way through a month, for example on 14 July to coincide with the rate cut. To read more about the offical HMRC line on the Flat Rate Scheme and the reductions, please click here

To read what the government has to say about the reductions in the VAT scheme and how it will be applied, please click here

If you’d like to read the government’s document about the attractions which qualify for this scheme, please click here