Important VAT changes for hospitality businesses
From 1 July 2026, the VAT rate applying to qualifying food and catering services in the hospitality sector has been reduced from 13.5% to 9%.
The 9% rate generally applies to restaurant and catering supplies, hot takeaway food, and hot tea and coffee. However, alcoholic beverages, bottled water, soft drinks, sports drinks and certain other beverages remain subject to the standard VAT rate. Businesses affected by the change should ensure that their tills, accounting systems, invoicing procedures and VAT codes have been updated to apply the correct rate from 1 July 2026.
It is important to note that the VAT rate on hotel and other qualifying accommodation remains at 13.5%. Where accommodation and meals are supplied together for a single price – for example, on a bed-and-breakfast basis – the charge may need to be apportioned between the different VAT rates on a fair and reasonable basis.
If you operate a restaurant, café, pub serving food, takeaway, catering business, hotel or other hospitality business and would like assistance in reviewing the application of the new VAT rates, please contact your usual adviser.
This bulletin provides general information only and should not be relied upon as specific tax advice.