VAT rise adds 6p on a pint of beer

By Ewan Turney

- Last updated on GMT

Related tags Vat rise Pint Pint glass Value added tax Bbpa

The VAT rise is expected to hit pubs hard
The VAT rise is expected to hit pubs hard
The Government should consider a lesser rate of VAT for the hospitality trade after today's rise to 20% is expected to add 6p on a pint. That's the...

The Government should consider a lesser rate of VAT for the hospitality trade after today's rise to 20% is expected to add 6p on a pint.

That's the message from the British Beer and Pub Association (BBPA), after it voiced concern over the rising taxation of beer, including a 26% rise in duty over the past two years.

The BBPA said the tax "double whammy" is shackling the pub sector in recession.

Chief executive Brigid Simmonds wants the Government to drop plans to stick to the controversial 2% above inflation duty escalator in the Budget set for March.

Research from Oxford Economics predicts the VAT increase alone will lead to the loss of around 8,800 jobs related to the sale of beer.

The further planned duty increases will cost the Treasury £40m in reduced tax revenues, and lead to another 10,000 job losses.

Instead, the BBPA wants the Government to consider a lower rate of VAT for the hospitality trade after similar moves across Europe proved to be a winner in creating jobs and boosting tax revenues.

The BBPA also warned that the VAT rise will hit pubs much harder than supermarkets because most are small family run businesses and are unable to absorb the increase.

"Today's VAT rise is anther tax blow for the industry," said Simmonds. "The Treasury is piling tax on top of tax.

"The 26% rise in beer duty in the past two years will now have an even higher VAT rate charged on top of it.

"The Treasury needs to think again when it comes to plans for further Beer Tax hikes in March.

"The Government has recognised that tax increases harm pubs, and wants policies that don't damage the sector.

"Now is the time to translate this wish into action, with policies that keep pubs open, and create jobs and wealth in the UK economy."

Meanwhile, the Federation of Small Businesses said 70% of its members believe the VAT rise will have a negative impact on trade.

It said 52% expect to increase prices, 45% expect a fall in turnover, and 36% expect a loss of customers as a result.

How are you dealing with the VAT rise and expected quiet January trading period? Let us know by emailing Ewan.Turney@william-reed.co.uk​ or hitting Post a comment​ below.

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