Many of you may have heard the Chancellor of the Exchequer announce last week a reduced VAT rate for the hospitality industry. Yay!
The hospitality industry has been told it can charge VAT on accommodation and food consumed on the premises at a reduced rate of 5%, down from the standard rate of 20% from 15th July 2020 to 31st January 2021.
I knew the devil would be in the detail so I didn’t want to make any announcement for our own weddings until I’d seen the small print. Blimey I have had to dust off my ole lawyer’s hat a few times over this COVID crisis.
I read through the pages (and pages) of the VAT small print today.
So will it reduce my wedding bill?
Sadly not, no. Not for venues which supply wedding packages. So that’s a number of things supplied by the wedding venue which are included in one price paid by you, the couple.
If we only supplied accommodation or only supplied food for the wedding breakfast, the reduced rate might apply. But we supply a wedding package. I don’t like the phrase, ‘wedding package’ but that’s what HMRC call it when you supply more than one thing for a wedding for one price.
So for us we supply accommodation (and the reduced rate would apply to that if that was all we supplied) but that’s only part of what we supply. We supply breakfast for the couples in the accommodation. Some of the weddings include the annexe, some include photography, flowers and wedding cake. They all include tables, chairs, lounging and garden furniture, decor items, table linen, crockery, cutlery & glassware. Some of them include the sound system, marquee and dance floor. That’s what’s meant by a ‘package’.
HMRC see that as a ‘single’ supply, it’s not a supply of lots of different things. It’s a single supply wedding package. And that single supply is standard rated at 20% and doesn’t benefit from the reduced rate.
Not even when catering is part of the package?
Nope. The VAT on food supplied by a caterer has been reduced from the standard rate of 20% to a reduced rate of 5%.
But that only applies when the caterer supplies food to the end consumer.
Our elopement and MMW weddings include wedding food as part of the package. But the caterer bills us and we’re not the end consumer. So sadly, it doesn’t apply.
What about when we pay the caterer directly?
This is when it could be a win for you.
With our summer Saturday weddings, the catering is supplied directly to our couples by the caterer. You pay them directly and separately from us. We don’t bill you for any catering. So that looks promising right? Possibly.
If you’ve booked a summer Saturday wedding with us then the caterer will bill you a month before your wedding. And sadly that will be after 31st January 2021 which at the moment, is the end of the reduced rate scheme.
You could if you wanted, reach agreement with the caterer to pay them early, ie before 31 January 2021. If you did that, they could charge you the lower rate. And that would be a win!
If the caterer is billing you for a deposit for your wedding, you should get the VAT reduction on your deposit bill if it’s sent to you between 15th July 2020 and 31st January 2021 even though the food isn’t supplied until after 31st January 2021. And that’s another win…
So yeah, this confirms my mantra, ‘read the small print’. As usual, ‘it all depends’.
It might help you if you’re staying in accommodation on holiday in the UK this summer. It should help you eating out in restaurants, cafes etc over the summer. But sadly, doesn’t help for your wedding if your catering is included as part of your wedding package from your venue – boo!
If you’ve got any questions about any of this, let me know. Drop me a line to email@example.com