Venues plead Chancellor to reduce tax burden as pubs and restaurants face ‘bleak summer’
Night time economy bosses have urged the Chancellor to slash VAT to 12.5 per cent in a bid to help businesses recover to their pre-Covid glory.
Pleas for help from sector leaders followed reports last week that Downing Street was mulling reducing the headline rate temporarily to help UK households navigate the cost of living crisis.
According to The Times, Boris Johnson’s chief of staff, Steve Barclay had advocated slashing the current 20 percent rate.
A reduction to 17.5 per cent would cost the government some £18bn, it was reported.
Hospitality and leisure firms saw VAT reduced to 5 per cent and then 12.5 per cent amid the pandemic, before the rate was returned to its pre-Covid rate this April.
The Night Time Industries Association (NTIA) reiterated calls for Rishi Sunak to relieve clubs’ tax burdens, with the trade body’s chief saying “decisive action” was needed after inflation surpassed nine per cent last month.
“Hospitality, night time economy and events industries are facing a bleak summer, and uncertainty to what the future holds with no clear strategy presented by the Prime Minister on when or how this crisis will be averted,” NTIA boss Michael Kill explained.
“Time is running out for the Government and the Chancellor to put measures in place to stem the spiraling costs of living,” he added.
Pubs and restaurants have also called for a tax cut, with the British Beer & Pub Association (BBPA) claiming April’s hike came at an annual cost to pubs of £516m.
“A VAT cut for hospitality is something we have been championing for a long time to relieve the immense pressures our industry is facing on rising costs,” the BBPA’s chief executive, Emma McClarkin said.
Venues are currently struggling with a shortage of staff that has left almost half operating reduced hours, industry research has revealed.
UKHospitality said the country had one of the highest rates of tax for food and accommodation in Europe.
A tax would “allow hospitality businesses to remain globally competitive, enable hospitality businesses to recover and protect jobs,” UKHospitality’s CEO Kate Nicholls, added.
The Treasury believes slashing taxes would drive inflation to even higher levels and could cause a harder financial crash, The Times reported last week.
A HM Treasury spokesperson said: “We’ve stood behind the hospitality sector throughout the pandemic with an almost £400 billion package of economy-wide support that saved millions of jobs.
“And at the Spring Statement we went further, announcing a £1,000 increase to the Employment Allowance which will cut taxes for hundreds of thousands of businesses. Eligible high street businesses also get 50 per cent off business rates bills and benefit from a freeze to the business rates multiplier, which puts the brakes on bill increases and is worth £4.6bn over the next five years.
“We have also frozen alcohol duty at the last three Budgets, saving consumers £5.7bn in total.”