There are three main types of room rates in regards to VAT when booking UK Serviced apartments.
This type of serviced apartment rate is
fully exempt from VAT as such the total net price quoted will be equal
to the total price paid by the customer.
In this scenario the VAT charged is 0% & VAT reclaimable is 0% .
Business customers must note that they cannot reclaim VAT as there is no VAT on this rate.
VAT is calculated at 20% for the first 28 nights, on the 29th night the rate of vat is 4%, the 4% per night rate continues for the rest of the stay.
This VAT situation is unique to
serviced apartments (does not apply to hotels) and offers the customer a
reduced price from the 29th night onwards. The reduced rate only
applies to continuous stays, there cannot be any breaks (check out and
check back in).
Government guidance on the Reduced Value Rule for long stay guests.
Business customers can reclaim the full VAT on this rate.
This type of serviced apartment rate is charged at the full rate of VAT for the service element of the rate.
The actual rate consists of the VAT
Exempt element also known as the rent, and VATable element also known as
the service charge. This type of vat only applies to few places.
Rent = The rental amount per night, rent is non VATtable in certain circumstances.
Service element = The cleaning service offered, by VAT law - all services are generally taxable.
Business customers must note that they can only reclaim a very small amount of VAT.
The Breakdown would be:
Rent £146.80 - VAT Exempt
Service £11.00 = VATable at 20% vat = £11.00 + £2.20 = £13.20
Total £146.80 + £13.20 = £160.00
The actual VAT paid on this rate of £160.00 is £2.20