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Eat Out to Help Out: Government Announces VAT cut for Hospitality Businesses

14 Oct 2020

Hospitality & Tourism Vat Cut

In a highly-anticipated parliamentary statement, the Chancellor announced a groundbreaking move which will see VAT for hospitality and tourism businesses cut to just 5% for the next six months.

The cut in VAT will apply to eat-in or takeaway food from restaurants, cafes, and pubs alongside hotels, B&Bs, and attractions such as zoos, cinemas and theme parks. The temporary reduction will remain in place until January.

Mr Sunak described the scheme as a “£4bn catalyst” to help protect over “2.4 million jobs”.

For guidance on how to change VAT rates on your POS system, click here.

Eat Out to Help Out

Another measure to support the hospitality sector is the “Eat Out to Help Out” scheme in which every UK resident will be given 50% discounts in restaurants, up to a maximum discount of £10 per head in August.

The Chancellor said “‘Meals eaten at any participating business will be 50% off up to a maximum discount of £10 per head for everyone, including children. We can all eat out to help out.”

The scheme does not allow alcoholic beverages to be discounted.

Businesses will need to register, and can do so through a website, open next Monday and apply in the month of August, the chancellor said in his statement.

Companies will then be able to claim the money back from the government and have it in their account within 5 working days.

Job Retention Bonus

In another measure poised to save jobs, the government has pledged to incentivise businesses to bring staff back with a £1,000 per employee bonus to be paid in January. To claim, businesses must bring employees back and pay them on average £520 per month.