There are VAT complexities associated with the glamping sector, but also opportunities as the temporary reduced rate of 5% VAT applies to the provision of holiday and camping accommodation until 1 October 2021 when it then increases to 12.5% before reverting back to 20% from 1 April 2022. Landowners with interests in this area, should ensure they address the complexities but also apply the 5% VAT rate on relevant whilst it is still available.
The VAT rules on glamping, like so many other aspects of rural business, are difficult. For example, VAT is chargeable by glamping businesses (which may or may not be the owner of the land), on the fees paid by the glampers if income from this and other VAT-able aspects of the business exceeds the VAT registration threshold. The threshold is currently £85,000 in any 12 months.
Those who are providing such accommodation and are likely to exceed this threshold should register and have their VAT calculations done well in advance of setting prices for the peak holiday periods, so that VAT can be applied to what they charge to their clients.
The VAT rules that apply to purchases of new caravans are equally complex, as certain mobile shepherd huts may qualify for 5% reduced rate or the zero rate relief depending on the circumstances. The VAT rules to caravans relate to both the size of the caravan and whether it is for holiday use or not. It is possible for the supply of a caravan to be subject to VAT during the holiday season when let as holiday accommodation, but VAT exempt if let as residential or staff accommodation, or for a period of 28 days or longer outside the standard holiday season.
Nick Hart, VAT Director, comments:
“Glamping is typically viewed as a holiday activity, but there are exceptions, particularly in relation to shepherd huts. Where there is doubt, each case is best assessed individually. Also, where a landowner or farmer hires out land and huts to be run by a separate business, the expectation might be that that the charge would be VAT exempt, although it may well actually be standard rated as the provision of a camping pitch.
“The pitfalls are numerous, and specialist advice is recommended.”