The VAT reduction from 20% to 5% for tourism and hospitality related activities will be welcomed by businesses and consumers alike.

The industry support body Tourism Alliance has had clarification from HM Treasury that the reduction, in place from 15 July to 12 January 2021, applies to when payment is received, not when the product is consumed.

This means that you can make tourism- and hospitality industry-related bookings between 15 July and 12 January 2021 for next year’s vacations at the reduced VAT rate. That should mean cheaper campsite bookings. Passenger ferry tickets are zero rated, so prices for crossings will be unaffected by the reduction. Businesses can improve their cash flow and consumers benefit from cheaper bookings. It’s a win-win situation.

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