Wednesday 8 July 2020 1:27 pm

Sunak slashes VAT on hospitality and tourism to five per cent

Chancellor Rishi Sunak has slashed VAT on hospitality and tourism from 20 per cent to 5 per cent for six months, as the government seeks to revive the UK economy after months of lockdown.

In an unprecedented announcement in the Commons today, Sunak vowed to cut the VAT rate from next Wednesday until 12 January 2021.

Read more: Hospitality sector welcomes ‘blaze of sunshine’ from chancellor’s VAT cut

“I’ve decided for the next six months to cut VAT on food, accommodation and attractions,” he said. The reduction will apply to “eating hot or takeaway food from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites, and caravan sites.”

The VAT cut also includes attractions such as cinemas, theme parks and zoos.

“This is a £4bn catalyst for the hospitality and tourism sectors beneftting over 150,000 businesses and consumers everywhere,” said Sunak, adding that the new measure would help protect £2.4m jobs in the UK.

Date night discount

Sunak also pledged to give everyone in the country a 50 per cent discount on meals eaten out for the month of August, in a new Eat Out to Help Out scheme.

The discount will be eligible from Monday to Wednesday at every participating UK business, up to a maximum of £10 per head, including children.

“This has never been tried in the UK before,” said the chancellor. “This moment is unique. We need to be creative.”

The chancellor’s new Eat Out to Help Out scheme

Sunak said the sweeping change would help support the 1.8m people in the UK’s hospitality industry, which has been battered by months of forced closures during lockdown.

“For me, this has never just been a question of economics, but of values. I believe in the nobility of work, I believe in the inspiring power of opportunity, I believe in the British people’s fortitude and endurance,” Sunak added.

The announcements formed part of a summer statement from the chancellor aimed at securing jobs and reviving the British economy as it faces its worst recession on record.

Sunak cited the IMF’s prediction that the UK currently faces its deepest recession since records began, with the economy already contracting 25 per cent in just two months — the same amount it grew in 18 years.

“Despite the extraordinary support we’ve already provided we face profound challenges,” said the chancellor. “Job losses are the most urgent challenge we face, and I will never accept unemployment as an unavoidable outcome.”

The sweeping measures announced today are set to ensure there is enough demand as businesses begin to reopen with social distancing measures in place after more than three months of closure during the pandemic.

The Treasury added that the moves would “give these businesses the confidence to maintain their staff, as more people get through the door and business activity kick-starts again.”

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