VQOTW: Temporary reduced rating for the hire of boats and motorhomes

My client’s limited company owns various holiday cottages and they are applying the temporary reduced rate to this income from 15th July 2020 to 12th January 2021. They also own several narrow boats, camper vans and motorhomes which have become very popular this year with more families wanting to holiday in the UK in their own personal space. They have read various articles online and they are a little confused as to whether the reduced rate can be applied to the rental income received from narrow boats, camper vans and motorhomes?

As you have said, from 15th July 2020 a temporary reduced rate was introduced for supplies of holiday accommodation up until 12th January 2021. Holiday accommodation includes:

  • any house
  • flat
  • chalet
  • villa
  • beach hut
  • tent
  • caravan
  • houseboat

This list is not exhaustive.

HMRC had initially appeared to exclude accommodation in motor homes and narrowboats altogether from the temporary reduced rate, referring to them as means of transport rather than holiday accommodation. However, following a challenge by British Marine, HMRC quickly updated their guidance to allow the temporary reduced rate for boats held out as holiday accommodation.

HMRC have said that the hire of a boat can qualify for the temporary reduced rate, so long as it is suitable for holiday accommodation and is being held out for use as holiday accommodation. A boat that is hired out for a day for someone to enjoy the activity of sailing will not qualify for the temporary reduced rate.

The same principal applies to the hire of motorhomes and camper vans – where the hire is held out as holiday accommodation, the hire charge can be reduced rated. The reduced rate however would not apply to the outright sale of a motorhome.


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Tony joined HMRC in 2015 where he managed a cross-tax Hidden Economy team specialising in failure to notify compliance work and evasion. He developed a sound understanding of VAT as well as gaining significant knowledge of the compliance penalties regime and Schedule 36 compliance powers.

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