85% of hospitality operators not passing on VAT cut to customers

By Nikkie Thatcher

- Last updated on GMT

Business decision: the poll found the majority of operators are not planning on passing the 15% drop in VAT on to guests
Business decision: the poll found the majority of operators are not planning on passing the 15% drop in VAT on to guests

Related tags: Vat, Legislation, Tax, Food, Soft drinks

Most operators in hospitality will not be passing on the discounted rate of VAT on food and soft drinks to guests, new research has revealed.

The poll by HIM/MCA Insight, a division of The Morning Advertiser​​​​​​​’s​​​​ parent company William Reed Business Media, also found that, when broken down into operator types, 137 of the 163 pubs (84%) included in the survey said they would not be passing the VAT cut on to customers.

Of the 26 pubs who are going to pass on the discount, eight said they will pass on 15%, 10 will pass on 5% to 7.5%, six are passing on 8% to 14% and four said they will pass on less than 5%.

Closure recognition

Chancellor of the Exchequer Rishi Sunak announced earlier this month that the rate of VAT on food and non-alcoholic beverages will be cut from 20% to 5%​ until January 2021.

This comes after the Government confirmed it wanted to see businesses passing on the benefits of its VAT cut to customers​ where possible.

A spokesperson for the Treasury said: “We want businesses to pass on the benefit to customers if they can, and almost four fifths of businesses said they did so in 2008. But we recognise many of these businesses have been closed and without income for months, and decisions on prices are ultimately for businesses rather than the Government.”

 survey by HIM/MCA Insight also asked operators if they were going to be introducing deposits to secure bookings and of the 265 hospitality operators, with just 16% claiming they would be.

Confidence levels

Respondents were also asked about the amount of confidence they had about their future of their business.

Some 66% of operators asked expressed a level of confidence in this week’s poll – down slightly from last week’s (68%).

Poll respondents included 265 founders or board level operators across pubs, restaurants and the food-to-go sector.

Related topics: Legislation

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