VAT cut to 5% for hotels and restaurants – but will you get a discount?

What if I have a future hotel or holiday rental booking?

We’ve been contacted by several MoneySavers with future hotel bookings, asking if they should now be given a discount when they pay, or a partial refund, as their accommodation provider will now pay a lower rate of VAT.

One MoneySaver, Jane, emailed: « I booked a holiday apartment last year for this August and paid a deposit, and I’ve now been sent an invoice to pay the balance. I was expecting to see a reduction in the balance to reflect the VAT reduction as the service will be provided after 15 July – can I pay a reduced rate? »

As above, businesses DON’T have to pass on the VAT cut, so you don’t have an automatic right to a discount or refund if your booking is after Wednesday 15 July.

The Institute of Chartered Accountants in England and Wales told us accommodation providers don’t have to give discounts or refunds either on deposits that have already been paid or any remaining balance still to pay – saying it’s up to the individual hotel whether to pass on the saving or not.

However, some hotels may decide to give discounts now that the VAT rate has been lowered – again, there’s likely to be variation. Accor, which runs hotel brands such as Novotel, Mercure and Ibis, told us it would apply the VAT reduction on all future payments on both new and existing bookings. But Radisson told us it is still reviewing its rates following the Government announcement.

If you have other questions or believe you’re being asked to pay more than you should, let us know at news@moneysavingexpert.com.

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