UK government throws hospitality sector a £4 billion lifeline

The UK Chancellor Rishi Sunak has announced cuts to VAT worth over £4 billion to support the British tourism and hospitality sector.

In his Summer Statement to the House of Commons on Wednesday, the Chancellor outlined a VAT rate cut for the two sectors from 20 per cent to five per cent, to get the UK’s pubs, restaurants, cafés and B&Bs “bustling again”.

This measure, which will be in place temporarily from 15 July 2020 until 12 January 2021, relates specifically to food and non-alcoholic drinks and to accommodation and admission to attractions, such as theme parks and cinemas.

Adding to this, the Chancellor announced a new Eat Out to Help Out Scheme, which will provide a discount of 50 per cent up to £10 a person on eat-in meals, including non-alcoholic drinks, at participating establishments on Mondays, Tuesdays and Wednesdays for the month of August.

Restaurants, cafes and pubs can sign-up for the scheme on a new website on Monday 13 July 2020.

Eligible establishments are those in which food is sold for immediate on-premises consumption. This could include:

  • restaurants
  • cafés
  • public houses that serve food
  • hotel restaurants
  • restaurants and cafes within tourist attractions, holiday sites and leisure facilities
  • dining rooms within members’ clubs
  • workplace and school canteens

Businesses who have used other schemes like Coronavirus Job Retention Scheme and Self Employed Income Support Scheme may still register for the Eat Out to Help Out Scheme.

The discount can be applied to food and/or non-alcoholic drink purchased for immediate consumption on premises, up to a maximum discount of £10 per diner (inclusive of VAT). There is no minimum spend requirement.

Expenditure that is ineligible for the discount includes alcoholic drinks, tobacco products, food or drink that is to be consumed off premises, and food or drink that is sold as part of a private party, event or function taking place within an eligible establishment.

Visit gov.uk to find out how to register your restaurant or establishment for the Eat Out to Help Out Scheme.

If you’re a VAT registered business, check if you can temporarily reduce the rate of VAT on supplies relating to hospitality, accommodation, or admission to certain attractions.

Check which attractions are eligible for the temporary reduced rate of VAT from 15 July 2020.

Our business support specialists in the Hospitality sector remain available to assist businesses during this difficult time. Please contact Matthew Burge for further information and business support.

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