VAT CUT EXTENDED FOR HOSPITALITY
DRINKERS, diners and tourists will receive discounts for another year after the Chancellor extended a cut to VAT until April 2022.
Rishi Sunak said hospitality had been ‘one of the hardesthit sectors’ and 150,000 businesses employing more than 2.4 million people ‘needed our support’.
He said the cut from 20 to 5 per cent would be extended until September ‘to protect jobs’, before increasing to an interim rate of 12.5 per cent between October and March.
Taxes on alcoholic drinks will also be frozen for only the third time in two decades, reflecting that ‘this is a tough time for hospitality’. The duty cut equates to a 2p saving on a pint of beer, 8p on a bottle of wine and 30p on a 75cl bottle of Scotch whisky.
The VAT cut will cost the Treasury £5 billion, while the oneyear freeze of duties on spirits, wine, cider and beer will cost £315 million. It is hoped the cuts will encourage customers out of their homes to spend, once firms are allowed to reopen from April 12.
Surrey publican Garry Tallent said the relief measures had given his business ‘a fighting chance’ of survival.
Mr Tallent, 57, who runs The Red Lion in Chobham with his partner Sandy Masson, said he had hoped alcohol duty would be cut, but he was pleased with the support offered, and the extension to the furlough scheme will help him retain his 16 staff members. He added: ‘The VAT cuts have given us a fighting chance of survival.
‘We would have liked them to be extended for longer but it feels like the Government have given us a workable solution to the crisis. It would also have been nice to see alcohol duties brought down for pubs, but overall I was more pleased than I was disappointed.’ Mr Tallent took over The Red Lion in August 2019 and the business has lost around £140,000 during the pandemic.
He said: ‘The support offered doesn’t even touch the sides of what we have lost. But pubs will always be a volatile industry, even in the best of times. We’re very resilient and we’re used to thinking on our feet.’
Economists have predicted a ‘roaring 20s’ as households unleash £180 billion of savings built up during the pandemic.
But businesses are worried that ongoing worries about the virus will mean many will be nervous to head out, dampening the recovery.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: ‘This was a good Budget for pubs and brewers in the short term.’
But pubs that do not serve food hit back at Mr Sunak’s measures, as they do not benefit from the VAT cut.
Dawn Hopkins, of the Campaign for Pubs, said: ‘Rishi Sunak either doesn’t understand or doesn’t care about the classic community local pub, as he has yet again discriminated against them with a food-only VAT cut that funnels millions to the likes of KFC.’