Catering – Temporary reduced rate

With effect from 15 July, many businesses in the restaurants and catering sector will be able to supply their services at 5%.

The measure will be in force until 12 January 2021, and applies to the following supplies of food and drink:

• hot and cold food for consumption on the premises on which they are supplied
• hot and cold non-alcoholic beverages for consumption on the premises on which they are supplied
• hot takeaway food for consumption off the premises on which they are supplied
• hot takeaway non-alcoholic beverages for consumption off the premises on which they are supplied

However, any supplies of food and drink that are supplied as part of a supply of catering services for consumption off-premises remain standard rated.

The intention is that supplies of catering to the public that would otherwise attract VAT at the standard rate will now, temporarily, be taxable at the reduced rate in an effort to kickstart the economy.

There are some exceptions of course;

• off-premises catering – which seems aimed at catering contractors supplying events;
• packaged supplies – supplies of bed and board which include a supply of packed meals for a single charge may be charged @ 5%. In some cases packed lunches sold for an additional fee may actually be zero-rated.
• some items that qualify for the 5% as an on premises supply of catering may be chargeable at 20% when sold from a takeaway for off-premises consumption – e.g.. crisps or confectionery

Full details may be found here in HMRC’s amended public notice.