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VAT Invoicing for Longer Stays
AwayOnBusiness applies UK HMRC VAT Rules according to the following:
VAT on Accommodation for Longer Stays
There are special rules applicable to longer stays.
This is described in detail in HMRC’s VAT Notice 709/3 in sections 3 and 8.
In essence, stays exceeding 28 days are not subject to VAT on the accommodation element from day 29 onwards. This is not the same as an exempt supply and is more closely aligned with zero rated supplies. The rule requires any charges for food, together with 20% of the value of the accommodation, to be subject to VAT at the standard rate, with the remaining 80% of the accommodation element being relieved from VAT.
Effectively this gives a 4% rate of VAT on the accommodation charges from day 29 onwards (i.e. 20% x 20%).
When receiving your Tax Invoice for longer stays, you will notice it has been split into the portion upto 28 days, then another portion for anything after. This later portion is then split into 20% VAT on 20% Supply, and 0% VAT on 80% Supply.
For stay that have been extended after their commencement, this will form a continuous booking and the 28 day rule will apply from the commencement of your original, unbroken stay.