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Work Travel Published: 29th May 2024

Do You Pay VAT On Serviced Accommodation?

When guests book a serviced apartment, they will have to pay VAT. As the property manager or owner, you decide whether to charge them for it or not. Let’s closely examine the technicalities surrounding VAT and the steps you need to take to ensure it’s covered.


What are the VAT rules for serviced accommodation?


Serviced apartments fall under the same hotel tax classifications, so the same tax rates apply. VAT is charged at 20% of the nightly rate or booking total. However, you should also note that this tax charge only applies when your business starts generating an income of over £85,000 per annum. At this point, you are legally obligated to pay VAT every quarter to remain compliant with HMRC’s regulations. 


Tour Operators' Margin Scheme (TOMS)


If you’re looking for ways to manage your VAT on serviced apartments you may own, then you may have come across the term, “Tour Operators’ Margin Scheme”, also known as TOMS. In a nutshell, this accounting system allows those working in the tours and travel industry to sell travel services in the UK and the EU easier. 

It makes charging VAT a lot easier, as these professionals essentially sell “packages” including flights, possibly serviced accommodation and perhaps any transport in between. It's the perfect solution for anyone who needs to account for VAT for any of these types of services in the respective areas they’re used in. 


The Benefits of TOMS


TOMS has several benefits for tour operators and those working in the travel industry. The key ones include the following. 


Simplifies Charging and Paying VAT


TOMS simplifies the process of charging and paying VAT for tour operators. Instead of calculating VAT on the full selling price of a travel package, operators only need to account for VAT on the margin they make. This simplification reduces the administrative burden associated with VAT calculations, making it easier for businesses to comply with tax regulations and manage their finances efficiently.


Single Service Classification


Under TOMS, tour operators' services are treated as a single service supplied to the traveler. This classification streamlines the VAT treatment by considering all travel package components as part of one service. As a result, the place of supply, taxable basis calculation, and input VAT deduction are determined based on this single service concept, providing clarity and consistency in VAT obligations for tour operators.


VAT Exemption

While VAT on margin scheme supplies bought in for resale cannot be reclaimed, there is an exemption for certain services within TOMS. This exemption allows tour operators to reclaim VAT on overheads that are outside the scope of the margin scheme in the normal way. By distinguishing between VAT treatment for different types of services, the exemption under TOMS ensures that businesses can optimize their VAT recovery while complying with the regulations specific to the scheme.




VAT is chargeable on serviced accommodation in the same way it's charged for hotel rooms. How hosts and serviced accommodation managers choose to charge this is up to them, but schemes like TOMS help those working in the travel industry greatly when it comes to charging and paying VAT.

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