EC agrees to VAT cut on pub meals

Pubs could be in line to make savings on meals after the European Commission agreed to allow member states to reduce VAT rates in a range of sectors.

The ruling applies to meals sold in pubs and restaurants and could lead to VAT being as low as five per cent.

However it is now up to the UK government to decide if it wants to apply the new levels.

The EC ruling follows lobbying by various groups.

The Campaign for Real Ale's (CAMRA) head of policy and public affairs Jonathan Mail welcomed the move and added that he hopes the measure could also be applied to cask ale.

He said: "A reduced VAT rate on pub meals would save jobs and save many valued community pubs from closure.

"When we met the commission in January we stressed that a VAT reduction on meals would help stem the loss of pubs and bars across Europe.

"With nearly six pubs a day closing the government must consider the introduction of a reduced rate of VAT for pub meals without delay.

"This is good news and shows that where a strong case is put it is possible to change EU tax rules.

"Over the next year CAMRA will be lobbying the European Union to amend its rules on excise duty to enable the UK government to reduce duty on beer sold and consumed in pubs."

In the pre-Budget Report in November Alistair Darling cut VAT from 17.5 per cent to 15 per cent, but any benefits to the trade were offset by another eight per cent rise in alcohol duty.

VAT is set to revert to 17.5 per cent at the end of the year.