Holiday lets owners including Airbnb operators have been handed another tax break while traditional landlords continue to be overlooked by the Government.

Ministers have extended a reduction in VAT on holiday homes until 31st March 2021 in response to the impact of the pandemic, but has yet to offer any financial support for landlords.

The temporary change – from the standard 20% to the reduced rate of 5% – was first introduced on 15th July in the Chancellor’s economic update and was due to last until 12th January 2021, at a cost of £4 billion.

Now it’s announced that the benefit will last until the spring.

The cut was made in response to the pandemic to support businesses severely affected by forced closures and social distancing measures.

VAT savings

The Government says: “It is important to note that it is not mandatory to pass on the effective ‘VAT saving’ to customers.

“This is entirely a commercial decision for business operators, and whether or not prices and rates are to be adjusted is for each business to decide, taking into account their own trading terms and conditions.”

The UK has one of the highest VAT rates on the tourism and entertainments sectors; most other European countries have previously taken advantage of EU rules which allow reduced VAT rates.

Read more stories about VAT and landlords.

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