VAT cut for hospitality businesses and 50% meal discount for everyone to stimulate restaurant spend

Rishi Sunak, Chancellor of the Exchequer 3

Chancellor Rishi Sunak has unveiled a new set of measures designed to kick-start the hospitality sector as it bids to bounce back from the coronavirus pandemic.

Speaking in Parliament during the past hour, Mr Sunak laid out a plan that includes cutting VAT for hospitality businesses and providing discounts on meals to encourage people to spend in restaurants again.

Referencing the hospitality sector, which has been particularly badly hit, he promised to cut VAT on food, accommodation and attractions.

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“VAT will be reduced, from next Wednesday until January 12th, from 20% to 5%,” he confirmed.

Mr Sunak also announced that the government will give everyone 50% off meals in participating restaurants during August.

The scheme has been branded “Eat Out to Help Out” and is aimed at getting the hospitality sector moving again.

The discount will go up to £10 per head for adults and children, and apply Monday to Wednesday.

Meanwhile, the chancellor said the government will pay a £1,000 bonus to businesses for each furloughed person brought back and employed through to January 2021.

And companies will be offered £2,000 each to encourage them to hire apprentices.

Jon Stevens, tax partner at global legal business DWF, said: “The hospitality sector has long campaigned for a reduced rate of VAT and it is a shame that it has taken the economic damage of Covid-19 to produce a temporary tax cut.

“However, businesses in the restaurant and hospitality sectors will welcome the reduction in VAT to 5% that will hopefully encourage people to spend money with them while we recover from lockdown.”

UKHospitality chief executive, Kate Nicholls, said: “It is reassuring that the chancellor singled out hospitality and tourism as a vital part of the UK’s economy and a pillar of social life around the UK. It is also good to see that government acknowledges that our sector has been uniquely hit by this pandemic.

“Customer confidence is key to our sector’s revival and our ability to help Britain’s economic recovery. Applying every precaution to provide safe venues will count for nothing if customers are not coming through our doors.

“This significant VAT cut, heightened ability to retain staff and incentives for consumers to eat out together amount to a huge bonus. We hope that the UK public rightly sees it as sign that we are ready to welcome them back safely. The future of many businesses and jobs depends on it.

“The measures to support job retention and recruitment are very positive. Even after the reopening of some venues, we estimate that around 1.5 million workers in our sector are still furloughed. With revenues likely to be down for the foreseeable future, the support measures to get workers off furlough and back into work will be greatly appreciated.”

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Andrew Seymour

The author Andrew Seymour

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