Hiring out a room or hall on its own is normally exempt from VAT, because it is a licence to occupy property, unless the owner has opted to tax the building. The answer changes when the hire is part of something bigger: a wedding or party package is a single standard rated supply, and a room in a hotel provided for a meal or alongside bedrooms is standard rated whoever does the catering.

Why is plain room hire usually exempt?

Section 31 of the VAT Act 1994 makes the supplies listed in Schedule 9 exempt, and Group 1 of that Schedule covers most grants of interests in, rights over and licences to occupy property. HMRC explains in VAT Notice 742, paragraph 2.5, that a licence to occupy exists only where the customer gets the right to occupy a defined area, for an agreed period, in return for payment, with the right to occupy it as owner and to exclude others. All of those features must be present.

Paragraph 2.6 of the same notice gives hiring out a hall or other accommodation for meetings or parties as an example of a licence to occupy, and says the use of a kitchen area, lighting and furniture can be included. So a village hall let for a Saturday birthday party, a meeting room booked by a club for its committee, or a function room hired by a firm for a training day will normally be exempt if the venue simply provides the space.

Exempt means no VAT is charged. It does not mean the income is ignored: the venue cannot normally recover VAT on costs that relate to exempt income, which is covered below.

When does the option to tax change the answer?

An owner can opt to tax a building. Once that has happened, supplies of the opted property are normally standard rated (VAT Notice 742, paragraph 3.1), and that includes room hire. Notice 709/3, paragraph 4.3, makes the same point for hotels: hiring a room for a meeting is generally exempt, but the hotel may standard rate it by opting to tax. HMRC’s own manual (VATLP11800) remarks that most hotel chains are thought to have opted to tax their conference facilities.

For a business customer this usually makes little difference, because VAT at the standard rate of 20% can be reclaimed in the normal way. For a charity, a private individual or a partly exempt customer it is a real cost, so it is worth asking the venue whether it has opted before quoting a budget. The mechanics are covered in our guide to the option to tax.

Why are wedding and party packages standard rated?

Notice 742, paragraph 2.6, excludes from the exempt hall hire example any wedding or party facilities where the supplier does more than supply accommodation, for example by assisting with entertainment and arranging catering. Paragraph 2.7 lists wedding facilities, including use of rooms for a ceremony, wedding breakfast and evening party, as something that is not a licence to occupy.

Notice 709/3, paragraph 4.4, says a package of wedding services is a single standard rated supply, whether the catering is supplied by the venue or by someone else. HMRC’s manual at VATLP11800 cites tribunal decisions that support this even where the venue tried to show room hire as a separate exempt line, including Willerby Manor Hotels Limited (VTD 16673), Leez Priory (VTD 18185) and Chewton Glen Hotels Ltd (VTD 20686).

The same manual page describes Best Images Limited (TC 00480), where the caterer was a third party hired by the customer. The venue still lost exemption because it also advised on caterers and music, had staff on hand during the event, provided tables and chairs and cleaned up. The tribunal found it was not carrying on the passive activity of letting property. The practical test is what the venue actually does on the day, not what the invoice calls it.

How does adding catering affect a meeting room?

Notice 709/3, paragraph 4.3, sets out three positions.

  • Minimal refreshments. Where a meeting or conference room is supplied with tea, coffee and biscuits, the room and the incidental refreshments are a single exempt supply.
  • Substantial refreshments. Where a meal or buffet is served, the catering is a separate supply and VAT is due based on the normal charge for that catering.
  • Room, meals and bedrooms for one price. Each element is a separate supply: the catering and overnight accommodation are taxable, while the meeting room is exempt unless the venue has opted to tax.

HMRC’s manual (VATLP11800) applies this to hotel delegate rates. An inclusive day rate covering a conference room and meals must be apportioned between exempt room hire and taxable catering. An inclusive rate that also covers an overnight stay is split three ways. Any extras charged separately, such as catering, car parking, equipment and a licensed bar, are standard rated (Notice 709/3, paragraph 4.3). Catering supplied by a third party at functions such as wedding receptions, parties or conferences is itself standard rated catering (Notice 709/1); see our guide to VAT on hot food and catering.

Is a hotel function room treated differently from a village hall?

Yes. Item 1(d) of Group 1 takes out of exemption the provision, in a hotel, inn, boarding house or similar establishment, of sleeping accommodation or of rooms provided in conjunction with sleeping accommodation (VATLP11100). HMRC’s manual at VATLP11700 adds that a room supplied in such an establishment for the purpose of a supply of catering is standard rated, regardless of whether the room provider or a third party supplies the food. A hotel room hired for a private dinner is therefore standard rated even if an outside caterer cooks.

A hotel room supplied for neither sleeping nor catering, such as a room for a meeting or interviews, stays exempt (subject to the option to tax). VATLP11700 says that remains true even where the people using it go and eat in the dining room and pay for their meals separately. A community hall is not a hotel, so a self catered party there falls back on the ordinary exempt licence treatment unless the hall does more than provide the space. Bedrooms themselves are covered in our guide to holiday accommodation and VAT.

What about halls let for sport and fitness classes?

Letting facilities for sport or physical recreation is normally standard rated (Notice 742, paragraph 5.1). A general purpose hall, such as a village or church hall with floor markings, is not a sports facility, and letting it is exempt even when it is used for sport. If the hall comes with equipment such as racquets and nets, the supply becomes standard rated sports facilities (paragraph 5.2).

Two exceptions bring sports lettings back into exemption, subject to the option to tax:

  • a single let for a continuous period of over 24 hours, where the hirer has exclusive control throughout (paragraph 5.3)
  • a series of 10 or more sessions for the same activity at the same place, with intervals of at least one day and no more than 14 days, paid for as a whole with written evidence that payment is due whether or not each session is used (paragraph 5.4)

How does this look for a typical venue?

Illustration only. A registered company owns a converted barn and has not opted to tax. It makes three bookings in one month.

Booking What is supplied Treatment
Local society meeting, £150 Room, chairs, tea and coffee Exempt room hire with incidental refreshments
Business seminar, £1,000 day rate Room plus a buffet lunch the venue would normally sell for £300 £700 exempt room hire and £300 standard rated catering (£50 VAT if the £300 is VAT inclusive)
Wedding, £6,000 Rooms for ceremony and reception, venue coordinator, catering arranged, tables dressed Single standard rated supply, £1,000 VAT if the price includes VAT

The split on the seminar must be fair and supportable. Using the venue’s normal price for the catering, as Notice 709/3 suggests, is the simplest defensible approach.

What mistakes come up most often?

  • Splitting a wedding package into an exempt room line and a taxable catering line. The tribunal cases above show HMRC will treat the whole package as standard rated.
  • Hotels treating a function room booked for a dinner as exempt because the food comes from an outside caterer.
  • Forgetting that an option to tax made years ago covers the function rooms as well as any commercial lets in the same building.
  • Ignoring the cost side. Input tax that relates to exempt supplies cannot normally be recovered unless it falls within the de minimis limits (Notice 706), so a venue with exempt hire income usually needs a partial exemption calculation.
  • Counting exempt room hire towards the registration threshold. Taxable turnover excludes exempt supplies (GOV.UK, Register for VAT), so a venue whose income is mostly exempt hire may be below the VAT registration threshold even with a large turnover.
  • Assuming a hairdresser’s chair rental works like a room let. It does not; see chair and room rental in salons.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.