FlipStay blog · 23 October 2026

UK Hotel VAT: 20% on Rooms and Meals and What to Show

UK hotels charge 20% VAT on rooms and meals. See how to work out VAT from a gross price and what a guest's VAT invoice should show, step by step.

A guest asks for a VAT invoice and you are not sure what it must show, or whether the price you quoted already includes VAT. This article covers the 20% rate on UK rooms and meals, how to split VAT out of a gross price, and what to put on the invoice.

Where the 20% applies

If your business is VAT-registered, the standard UK rate of 20% applies to room charges and to meals. That covers breakfast sold separately, dinner in your dining room, and food served to a room. If breakfast is included in the room rate, the whole bundled price is charged at 20% as well, so you do not need to split it for VAT purposes.

A few points that catch small properties out:

• Where the hotel is decides the tax. A stay in a UK hotel is taxed in the UK. A guest booking through a foreign company does not change that, and there is no reverse charge to apply.
• VAT applies to extras too. Laundry, minibar items and room service are normally charged at the same rate as the rest of the bill. Check anything unusual with your accountant.
• Registration depends on turnover. If your taxable turnover is below the registration threshold, you do not have to register and you must not charge or show VAT. The threshold changes from time to time, so check the current figure with HMRC or your accountant.
• Very long stays can be treated differently. If you have guests staying for many weeks, ask your accountant before invoicing.

Service charges, tips and cancellation fees each have their own VAT treatment. Do not guess. Ask your accountant once and write the answer down.

What a VAT invoice should show

A guest who is a business will often need a proper VAT invoice to reclaim the VAT. An invoice for a registered business is generally expected to show:

1. Your business name and address.
2. Your VAT registration number.
3. A unique invoice number. HMRC expects invoice numbers to follow a sequence, so check with your accountant how strictly this applies to you.
4. The invoice date, and the date of supply if it differs (for a hotel, usually the checkout date or the stay dates).
5. The guest's name and address, or the company's name and address.
6. A description of what was supplied: room, number of nights, meals, extras.
7. The amount for each line before VAT, the VAT rate, and the VAT amount.
8. The total payable.

For small amounts, a less detailed invoice is allowed. The limit is set by HMRC, so confirm the current figure before you rely on it.

One thing to decide in advance is whether you show prices with VAT or without. Most consumers expect to see the full price they pay. Business guests often want the net figure, the VAT and the total. A good invoice shows all three, so both types of guest can read it.

A worked example: two nights and a dinner

You charge £150 a night, and that price already includes VAT. A guest stays two nights and has one dinner in the restaurant for £60, also including VAT. They paid a £100 advance at check-in.

To take VAT out of a price that includes 20%, divide the gross amount by 6. That gives the VAT. Subtract it to get the net amount.

Line · Gross (incl. VAT) · VAT 20% · Net

Room, 2 nights at £150 · £300.00 · £50.00 · £250.00 Dinner · £60.00 · £10.00 · £50.00 Total · £360.00 · £60.00 · £300.00

The guest owes £360.00 in total. After the £100 advance, the balance due is £260.00. The advance is part payment of the £360.00 and does not reduce the VAT. The invoice should still show the full £360.00 with £60.00 VAT.

If you price the other way, with a net rate of £125 a night, multiply by 1.2 to get the gross price of £150. Pick one method and use it for every rate, so the pennies always agree.

Round each line to the nearest penny and check that the lines add up to the total. A mismatch of a penny is a common reason a business customer's accounts team sends an invoice back.

Setting up your system and checking its limits

Whatever you use to produce invoices, test it with a real stay before the first business guest asks. Check that the VAT rate is 20%, that it applies to rooms and extras, and that the totals match your own calculation from the example above.

FlipStay is a free cloud property management system with a ready-made UK tax setup that you can edit. Each tax line can apply to the room, to extras, or to both, and checkout produces a PDF invoice you can print or e-mail to the guest. You can try it at https://flipstay.app.

Be clear about what any tool does and does not do. Specifically:

• Invoice numbers in the system are unique but not an unbroken sequence. If your accountant wants a gapless sequence, ask what to do.
• There is no field for a business guest's tax number.
• Invoices are produced in English.

No software can guarantee an invoice meets every HMRC rule for your specific business. Look at a sample invoice and compare it against the list in the section above, then ask your accountant to confirm it covers what you need.

What to do this week

1. Confirm with your accountant whether you must be, or already are, VAT-registered, and ask how to treat service charges and cancellation fees.
2. Pick a typical stay with a meal and work out the VAT by hand, using the divide-by-6 method. Compare it with what your system produces and fix any difference.
3. Print one sample invoice and tick it against the eight points above. Note what is missing, such as your VAT number or the guest's company details, and decide how you will add it.

Frequently asked questions

Do I charge VAT on breakfast included in the room rate?

Yes. If your business is VAT-registered, a bundled room-and-breakfast price is charged at 20% as a whole. You do not need to split the breakfast out for VAT purposes, though you can list it separately for the guest.

Can I charge VAT if I am not VAT-registered?

No. Only VAT-registered businesses may charge VAT or show it on an invoice. If your turnover is below the registration threshold, issue an ordinary invoice with no VAT. Check the current threshold with HMRC or your accountant.

Does a guest from a foreign company pay VAT on a UK hotel stay?

Yes. A hotel stay is taxed where the hotel is, so UK VAT applies and there is no reverse charge. The company may be able to reclaim it under its own country's rules, which is why a clear VAT invoice helps.

← All articles