Accountant for Hotels: Why Your Property Needs Industry Specific Expertise

Hotels Are Not Like Other Businesses

If you run a hotel, a guest house, a pub with rooms, or a serviced apartment block, you already know this. Your business has multiple revenue streams. Accommodation, food and drink, conference facilities, weddings, parking, maybe a small shop. Each one has different VAT treatment. Your payroll is complex with shift workers, tips, and troncs. You have significant capital assets that need careful handling for capital allowances.

A general accountant who handles a dozen high street shops and a few consultancies will not know the specific rules that apply to hotels. They might treat all your revenue as standard rated for VAT. They might miss the Tour Operators' Margin Scheme (TOMS) if you sell package holidays. They might not claim the correct capital allowances on your bedroom furniture, kitchen equipment, or building structure.

That is where a specialist accountant for hotels makes the difference. At Holloway Davies, our ICAEW qualified team works with hotels across the UK, from boutique B&Bs in the Lake District to city centre hotels in Manchester and Birmingham. We know the rules because we work with them every day.

VAT Is the Biggest Area Where Hotels Get It Wrong

VAT on hotel income is not straightforward. Here are the main points.

Accommodation is standard rated at 20%. That includes room charges, cancellation fees, and any extras like minibar items or pay-per-view films. But if you include breakfast in the room rate, that is part of the accommodation supply and also standard rated.

Restaurant and bar sales are standard rated at 20%. No exceptions here. But takeaway food sold from your premises may qualify for the zero rate if it is cold food. Hot takeaway food is standard rated. You need to track this carefully.

Conference and banqueting facilities are standard rated at 20%. Unless the organiser is a charity or a business that gives you a valid VAT exemption certificate. You need to check each booking.

Car parking is standard rated at 20%. Unless it is part of the room package and not separately charged. Then it is part of the accommodation supply.

The Tour Operators' Margin Scheme (TOMS) is mandatory for certain supplies. If you sell a package that includes accommodation and transport or other services you buy in from third parties, you must account for VAT under TOMS. This is a complex scheme. Many hotels get it wrong and face HMRC penalties.

A specialist accountant for hotels will review your revenue streams and apply the correct VAT treatment to each one. They will also check whether you are on the correct VAT scheme. The Flat Rate Scheme may not suit hotels with high VAT on purchases. The Annual Accounting Scheme might help with cash flow if you have seasonal peaks.

Payroll in Hotels Is More Complex Than Most Sectors

Hotels employ a mix of full time, part time, and casual staff. You have chefs, waiting staff, receptionists, housekeepers, maintenance workers, and managers. Many work shifts, including nights and weekends.

You also have tips and service charges. These need careful handling for PAYE and National Insurance. If you operate a tronc system where tips are distributed to staff through a troncmaster, the tronc is outside PAYE for the tips themselves. But the troncmaster must account for any employer NI on service charges that pass through your payroll. Get this wrong and HMRC can assess you for unpaid NI plus interest and penalties.

Accommodation provided to staff, known as living accommodation, is a taxable benefit in kind. You must report it on form P11D each year. There are exceptions for certain staff who are required to live on the premises for the better performance of their duties, like a resident manager. But the rules are strict. A general accountant may not know the distinction.

Meals provided to staff on the premises are generally exempt from tax if they are provided for the employer's convenience. But if you give free meals to off duty staff, that is a taxable benefit. Again, the detail matters.

Your specialist accountant for hotels will set up your payroll correctly from day one. They will advise on tronc arrangements, ensure P11D forms are accurate, and help you avoid costly HMRC compliance checks.

Corporation Tax and Capital Allowances for Hotels

Hotels are capital intensive businesses. You have the building, fixtures and fittings, kitchen equipment, laundry machinery, IT systems, and furniture. Each of these qualifies for different capital allowances.

Annual Investment Allowance (AIA) gives you 100% tax relief on most plant and machinery up to £1,000,000 per year. This covers kitchen equipment, furniture, IT, and similar assets. If you are renovating or refurbishing, you can claim AIA on the new assets.

Structures and Buildings Allowance (SBA) gives you 3% per year straight line relief on the cost of the building structure itself. This applies to new builds or significant renovations. It is a long term relief, but it adds up over time.

Full Expensing is available for limited companies on most main rate plant and machinery. This gives 100% relief in the year of purchase. It applies to new assets only, not second hand. If you are buying new kitchen equipment or a new boiler, Full Expensing may be better than AIA.

A general accountant might claim AIA on everything and miss the SBA claim entirely. Or they might not know that certain fixtures in a hotel, like light fittings and bathroom suites, are treated as plant and machinery, not part of the building structure. Getting this wrong costs you thousands in lost tax relief.

Your accountant for hotels will prepare a capital allowances schedule specific to your property. They will identify every qualifying asset and ensure you claim the maximum relief each year.

Making Tax Digital for Hotels

From April 2026, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) becomes mandatory for self employed individuals and landlords with qualifying income over £50,000. From April 2027, it applies to those with income over £30,000. From April 2028, it applies to those with income over £20,000.

If you run your hotel as a sole trader or partnership, you need to be ready for this. You must use compatible software to keep digital records and submit quarterly updates to HMRC. Paper records or spreadsheets without digital linking will not be acceptable.

If you run your hotel through a limited company, MTD for Corporation Tax is coming. HMRC is consulting on the timeline, but it is likely to be mandatory within the next few years.

Your specialist accountant will ensure your accounting software is MTD compliant. At Holloway Davies, we work with Xero, QuickBooks, and FreeAgent. We can help you choose the right platform and set it up correctly for your hotel's specific needs.

Why Choose Holloway Davies as Your Accountant for Hotels

We are ICAEW qualified accountants based in the UK. We work with hotels of every size. A 10 bedroom guest house in the Cotswolds. A 120 room city centre hotel in Leeds. A wedding venue with 50 staff in the Peak District. We understand the sector because we live in it.

We offer a full range of services. Tax planning, VAT compliance, payroll, bookkeeping, year end accounts, and strategic advice. We also handle company formations, R&D tax credits for hotels developing new systems, and exit planning if you are considering selling your property.

We are not a faceless online service. You get a dedicated partner who knows your business. We visit your property, understand your operations, and build a relationship. That is how we spot opportunities a general accountant would miss.

If you are considering selling your hotel, we can help with Business Asset Disposal Relief (BADR) planning. The lifetime limit is £1 million. The rate is 14% for disposals from 6 April 2025, rising to 18% from 6 April 2026. Early planning is essential.

If you are buying a hotel, we can review the accounts, identify tax risks, and structure the purchase efficiently. We can also advise on VAT implications of transferring a going concern.

What to Look for in an Accountant for Hotels

Not every firm that says they work with hotels actually knows the sector. Here are the questions to ask.

• Do they understand TOMS and when it applies?
• Can they prepare a capital allowances schedule for a hotel?
• Do they know the VAT treatment of accommodation versus food versus conference facilities?
• Have they handled tronc and tips for hotel payroll?
• Do they use cloud accounting software that integrates with your property management system (PMS)?
• Are they ICAEW qualified? That means they are regulated and insured.

If the answer to any of these is no, keep looking. Your hotel is too important to trust to someone who does not understand it.

Get in Touch

If you run a hotel, guest house, pub with rooms, or serviced apartment business, we want to hear from you. Contact us today for a no obligation initial conversation. We will review your current position, identify any issues, and explain how we can help.

We are based in the UK and work with hotels across England, Scotland, and Wales. Whether you are in London's Soho, Manchester's Northern Quarter, or a remote country estate, we can help.

Do not let a general accountant cost you money through missed claims and incorrect VAT treatment. Work with a specialist accountant for hotels who knows your business.