VAT cut is ‘sunshine’ for hospitality sector

FOOD, hotels and attractions will be cheaper for the next six months after a major VAT cut was announced yesterday.

Value added tax will be slashed from 20 per cent to just 5 per cent for the hospitality and tourism sector.

Chancellor Rishi Sunak said it would apply to tax on eat-in and hot takeaway food but not to alcohol or cold sandwiches.

Restaurants, pubs, hotels, B&Bs,

campsites and caravan sites will benefit along with cinemas, theme parks and zoos. The tax cut will run from next Wednesday until January 12.

The hospitality industry is the third-largest private sector employer in Britain, with 10 per cent of the workforce. Mr Sunak told MPs: ‘This is a £4billion catalyst for the hospitality and tourism sectors, benefiting over 150,000 businesses, and consumers everywhere – all helping to protect 2.4million jobs.’

The British Beer and Pub Association said the move would provide little help for drinks-led pubs but that most of its members welcomed the package of measures.

Jane Pendlebury, chief executive of the Hospitality Professionals Association, said: ‘The Chancellor’s announcements today are wonderful news for our industry and offer not just light at the end of the tunnel but a real blaze of sunshine.’

It is unclear how the Treasury can ensure the benefits are passed on to customers, rather than businesses simply raising their prices and pocketing the difference.