VAT on stays and packages
Holiday lets, B&Bs and hotels are all 20% VAT once you're registered, and you must register when your takings go over £90,000 a year. Guests staying more than 28 nights in a B&B or hotel pay less, and packages of bought-in travel pay VAT on the margin only.
Your answer
Choose what you sell and enter your yearly takings to see how VAT works for you.
About this calculator
For holiday let owners, B&B and guest house owners, small hotels, and anyone selling breaks or tours that include hotels, transport or trips they buy in.
It says whether you must register for VAT, roughly how much VAT is in your takings, and the mistake people in your position most often make. It's a guide: the conditions are in HMRC's notices, and we name them.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
Your takings include any VAT, so at 20% the VAT inside them is 1/6. If you're not registered, we show what that would be at today's prices.
For a B&B, guest house or hotel guest staying more than 28 nights in a row, from night 29 VAT is only on the facilities: at least 20% of the room charge, so 4% instead of 20%. Holiday lets don't get this.
On the Flat Rate Scheme you pay 10.5% of your takings (9.5% in your first year). For packages, VAT is 1/6 of your margin: takings less what you pay for the parts you buy in. For the £90,000 test, packages count the margin, not the takings.
Worked example
You don't need to register yet: your turnover of £85,000 is £5,000 under £90,000. If you did, about £14,167 of your takings would be VAT.
a holiday let · takings include any VAT · not VAT-registered
| What guests pay you in a year (including any VAT) | £85,000 |
|---|---|
| VAT: £85,000 × 1/6 (20% inside the price) | £14,167 |
| Your turnover: what counts towards £90,000 | £85,000 |
| VAT registration threshold (12 months) | £90,000 |
Based on HMRC's VAT Notices 709/3 (hotels and holiday accommodation), 709/5 (tour operators) and 733 (Flat Rate Scheme), and GOV.UK's VAT registration guidance.
Questions people ask
Is a holiday let exempt from VAT, like renting out a home?
No. Holiday accommodation is 20% once you're registered. Letting a home long term is exempt, and so is letting a holiday property off-season as someone's home for more than 28 days, where holidays are seasonal (not London or Edinburgh).
Does the 28-night rule apply to my holiday cottage?
No. It's for hotels, B&Bs, guest houses and similar places, and only for one person's stay of more than 28 nights in a row (VAT Notice 709/3).
Can I use the Flat Rate Scheme for tour packages?
No. If you have to use the Tour Operators' Margin Scheme, you can't use the Flat Rate Scheme as well.
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