Is There VAT on Hotel Rooms in the UK? Full Breakdown

While travelling, finding the perfect hotel means keeping an eye on costs, especially when VAT is part of the bill. You have to keep in mind that the budget doesn’t exceed, even if there is VAT on hotel rooms. 

So, is there VAT on hotel rooms in the UK? Yes, UK hotels charge VAT at the standard rate of 20% on most bookings. During the COVID-19 pandemic, the VAT rate on UK hotel rooms dropped to 5%. Then it was increased to 12.5% before returning to 20% in April 2022. Whether you are a tourist or want a weekend getaway, the VAT is part of your bill. 

This blog post will guide you through everything you need to know about VAT on UK hotel rooms. Let’s get started.

Is there VAT on hotel rooms in the UK?

Yes, there is VAT on hotel rooms in the UK. The UK hotel VAT rate is set at the standard rate, currently 20%. 

Whether you book a hotel over the phone, online, or walk in, the current VAT rate on hotel rooms UK will be applied. This is not only for hotels but also for all accommodation providers, including bed-and-breakfasts, serviced apartments, and even some holiday rentals.

The hotel VAT rate UK applies to the cost of the room you have booked. As there are different prices for different rooms, the VAT will be adjusted according to the pricing.

However, in most cases, there are separate charges for meals, drinks, or extras, each of which can have its own VAT treatment.

What is exempt from VAT in the UK?

Not everything in the UK is taxed under VAT. Some goods and services are zero-rated or exempt, meaning no VAT is charged. 

For example, most basic food items, children’s clothes, books, and public transport are zero-rated. Healthcare, education, and postage services are generally exempt.

However, VAT on hotels does not fall into these categories. Hotels provide accommodation, which is classed as a taxable supply in the UK. This means you’ll pay VAT on your stay unless you fall under a specific exemption.

Do non-UK citizens pay VAT in hotels?

Yes, if you are someone who is travelling to the UK from another country, you also have to pay VAT in UK hotels. The good thing is that, as a tourist from another country, you don’t have to pay extra VAT. You can pay the same rate as residents.

You see, VAT is a consumption tax, which means whenever you use any goods or services in the country, you will have to pay VAT.

Therefore, whether you are a UK citizen or a foreigner visiting the country, you are required to pay the 20 percent VAT rate UK on hotel rooms.

Can tourists claim VAT back in UK?

No, as a tourist, you can not reclaim your VAT on hotels in the UK. Before BREXIT, there was a tax refund scheme for accommodation, along with other goods and services. But from January 1, 2021, the government of UK has cancelled the scheme of VAT refunds to tourists.

Can I claim VAT on hotel accommodation UK?

Yes, you can reclaim the 20% VAT on a hotel accommodation in the UK if your trip is part of a business trip. If you are a tourist or just want a weekend getaway, you won’t be able to reclaim the VAT on hotel rooms in the UK. 

If your company is registered in the UK, you can reclaim the hotel accommodation VAT through your UK VAT return, which you file with the HMRC.

But there’s one thing, reclaiming the VAT on hotel accommodation in the UK can be challenging. And, if you are travelling on a business trip and you have booked your hotel through a third-party website, then recovering VAT would be tougher.

How VAT is shown on hotel bills?

When you check out of a UK hotel, your bill will usually list the room price, any extras, and the VAT separately. The UK hotel VAT rate is typically 20%, and this should be clearly displayed either as part of the total or in its own line showing the amount of tax you’ve paid.

So, let’s take a look at this example. If you have booked a room which costs £100 per night, which includes VAT, then how will it be shown in your bill? The bill might show £83.33, and the other £16.67 will be the VAT, which is £100 in total. 

Some hotels use “VAT inclusive” pricing, meaning the VAT on hotel rooms is already built into the advertised rate, but they’ll still note the tax amount on your receipt.

If you’re travelling for business and plan to reclaim hotel room VAT, you must request a full VAT invoice. This will include the hotel’s VAT number, the current VAT rate on hotel rooms UK, and the breakdown of all taxable charges such as meals, parking, and room service. Without this document, HMRC won’t accept your claim.

Will VAT be cut for hospitality in the UK?

The idea of reducing VAT in the hospitality sector is often discussed, especially after challenges like the pandemic.

As discussed earlier, the VAT rate was reduced to 5% during the COVID-19 pandemic. Then it was increased to 12.5% from October 2021 to March 2022. And from April 2022, the hospitality VAT rate UK was back to the standard 20%. 

Right now, there is no guarantee that there will be any cuts to the hospitality VAT rates in the UK. If there are any changes, then they will be announced in the government’s budget statements.

Is there VAT on hotel food?

Yes, there is VAT on hotel food only if you order extra food that is not included in the package that you booked. 

For example, if your package includes breakfast and lunch, you won’t have to pay VAT for that food. Because it’s already included in the hotel room VAT. However, if you want to order extra food that is not mentioned in your package, then you will have to pay VAT for that food.

Generally, room service, restaurant meals, and bar snacks from the hotel will be charged VAT at the standard rate.

Conclusion

So, is there VAT on hotel rooms in the UK? Yes, there is a 20% VAT on UK hotels, and it will not be cut until further notice from the UK government. If you order something outside your booked hotel package, you have to pay extra VAT on that too. 

If your trip is a part of a business trip, you can reclaim this VAT if you have the proper documents. Tourists and travellers can not reclaim their VAT. As a tourist there would be no extra charge and they can pay the same 20% VAT as the residents. 

So, always check properly before booking your hotel and make sure the hotel provides you with the proper invoice.