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VAT changes in response to the coronavirus pandemic

Q: My client is a café selling food and drink for eat-in and takeaway. Can they use the 5% VAT rate and also the Eat-Out-to-Help-Out scheme?

A: Yes. Sales of any food and drink (excl. alcoholic drinks) for eating within the café's premises will be at the 5% reduced rate between 15 July 2020 and 12 January 2021. In addition any hot food or hot (non-alcoholic) drink sold for takeaway by the customer is also reduced rated in this same period. At the same time, the café can register for the Eat Out to Help Out scheme via its government gateway. This only applies to eat-in meals inc. (non-alcoholic) drinks sold Mon - Wed from 3 to 31 August 2020 and only covers the lower of £10 and half the meal price. The café must still account for (reduced rate) VAT on the full meal selling price however. For example: if a family of 3 comes in and buys a meal and soft drink each for £16, £22 & £25 per person respectively, the cafe must account for VAT on the full £63, the family pays £35 (£8 + £12 + £15) and the other £28 is claimed by the café under the scheme.