Chancellor announces VAT cut and discount scheme for hospitality sector

James Baxter-Derrington reports

Chancellor of the Exchequer Rishi Sunak has announced VAT is to be cut to 5% for the hospitality sector, along with an “eat out to help out” discount at restaurants in his summer economic update.

The hospitality sector, including food (and non-alcoholic drinks), accommodation and attractions, will see VAT cut from 20% to 5% from 15 July 2020 until 12 January 2021, which will provide a “£4bn catalyst”, according to Sunak.

Further to this, Sunak announced an “eat out to help out” discount for the month of August, which will enable “participating businesses” to offer a 50% discount to customers who eat out at restaurants.

The discount will only be available from Monday to Wednesday throughout August, up to a maximum of £10 per head on a bill, including food and non-alcoholic drinks, but excluding alcoholic drinks.

Restaurants, pubs, cafes and other “eligible food service establishments” will have to apply to an online system to become participants and will have to pay the discounts themselves, before claiming back the amount online, which will be paid “within five working days”.

If an individual were to eat out once a day, every day the scheme is available at the maximum discount, the scheme would be worth a total £130 to that person.