TAXING TIMES
Cheaper UK holidays and meals out until April as VAT cut extended by Rishi Sunak
BRITS could enjoy cheaper holidays and meals out until March 31 as Chancellor Rishi Sunak extends the VAT cut for businesses.
VAT (value added tax) was slashed from 20% to 5% for the hospitality industry as part of Mr Sunak’s mini-Budget on July 8.
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The tax cut was due to remain in place until January 12, 2021, but today the Chancellor extended the cut until March 31.
He said: "To protect 2.4 million jobs through winter, we are cancelling the planned increase and will keep the lower VAT rate until March 31 next year."
Mr Sunak updated MPs on his plan for the economy this afternoon as part of his Winter Economy Plan.
Today, the Chancellor announced:
- Part-time furlough with two-thirds of wages paid
- Cheaper hols and meals out until March due to VAT cut extension
- Extra time for businesses to pay Bounce Back Loans
- Self-employment grants extended and more time to pay tax bills
- VAT bills deferred or split over 11 months
- All coronavirus loans for businesses extended until end of 2020
Full list of businesses where VAT has already been cut
THE VAT rate has been slashed for the hospitality and tourism industries in order to help them bounce back from the coronavirus crisis.
- Restaurants, cafes and pubs
- Hotels, inns, boarding houses and similar establishments
- Holiday and caravan parks and other holiday accommodation businesses charging fees for tent pitches or camping facilities
- Shows
- Theatres
- Circuses
- Fairs
- Amusement parks
- Concerts
- Museums
- Zoos
- Cinemas
- Exhibitions
- Similar cultural events and facilities
VAT is a tax paid by businesses to HMRC on the items or services they sell, with the savings typically passed on to customers in the price they pay for goods and services.
However, firms aren't required by law to pass on the reduction to consumers.
If the savings are passed on in full, it means cuts of 12.5% on the end price people pay.
In terms of holidays, the saving could cut £300 off a one-week family staycation.
When the VAT cut was first announced, the Treasury said the reduction is expected to save households around £160 a year on average.
The tax saving is for all businesses in the leisure and hospitality industries, including hotels, restaurants and attractions such as cinemas and theme parks.
Which businesses are passing on VAT savings to customers?
THE following chains have been passing on savings from the VAT cut to customers.
- Costa Coffee
- Greggs
- McDonald's
- Starbucks
- Accor Hotels (, , , )
- Bourne Leisure (, , )
The tax cut applies to food and non-alcoholic drinks, as well as accommodation and admission to attractions, but booze is excluded.
The Chancellor also revealed new ways to help furloughed workers once the scheme ends in October.
He unveiled a wage top-up scheme, named the Jobs Support Scheme paying a third of wages through winter.
The government has been warned by employers and trade unions that if new help isn't announced, over a million jobs could be at risk.
The Chancellor also extended coronavirus business loan support for struggling firms as part of his Winter Economy Plan.
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Cuts to VAT came alongside the government's Eat Out to Help Out scheme, which saw diners get 50% off meals, up to £10 a head, throughout August.
Here are some of the furlough replacements Mr Sunak could be considering today.
The Chancellor first hinted that a new package of support could be on the cards last week.
Boris Johnson promises 'creative and imaginative schemes' when Rishi Sunak ends coronavirus furlough cash
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