Extended VAT reduction scheme tops hospitality operators’ wish list

By Stuart Stone contact

- Last updated on GMT

VAT scheme priority: the extension of tax relief beyond January 2021 pipped a further freeze on business rates (34%) at the top of operators’ wish lists
VAT scheme priority: the extension of tax relief beyond January 2021 pipped a further freeze on business rates (34%) at the top of operators’ wish lists

Related tags: Legislation, Finance, Soft drinks

The extension of VAT relief tops hospitality business owners’ list of priorities ahead of a freeze in business rates and a furlough scheme extension according to new research.

The latest Hospitality Leaders poll by HIM/MCA Insight, a division of The Morning Advertiser​​​​​​​​’s​​​​​ parent company William Reed Business Media, found that 37% of respondents ranked an extension to the VAT reduction scheme beyond 21 January as their top priory for Government support.

The extension of tax relief beyond the first month of 2021 pipped a further freeze on business rates (34%) at the top of operators’ wish lists with an extension to the job retention scheme (11%) and an extended rent moratorium (10%) also featuring.

While Chancellor Rishi Sunak outlined a VAT cut​ on "most tourism and hospitality-related activities" from 20% to 5% for the next six months, which – as far as the on-trade is concerned – will apply to food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK, wet-led pubs were left feeling ​high and dry by the 8 July announcement.

However, HIM/MCA Insight’s most recent Hospitality Leaders Poll found that 85% of operators​ in hospitality will not be passing on the discounted rate of VAT on food and soft drinks to guests.

Eat Out to Help Out expiry date

On top of this, just 17% of hospitality business operators quizzed by HIM/MCA Insight plan to continue offering discounts after the eat out to help out scheme ends.

As previously reported by The Morning Advertiser (MA),​ the Eat Out to Help Out​ scheme will provide a 50% discount on sit-down meals in pubs, restaurants and cafés across the UK from Monday to Wednesday every week throughout August 2020.

The measure has been met with a mixed response thus far, primarily because many wet-led operators see it as exclusive. Admiral Taverns’ CEO Chris Jowsey, for example, told MA editor Ed Bedington that he sees it as “quite a partial, divisive” move​. 

“The midweek voucher scheme feels like an expensive, tokenistic gimmick​,” Campaign for Pubs chair and multiple operator Paul Crossman said. “This money could and should have been invested in meaningful support for all pubs.”

Conversely, Greene King’s Mackenzie described the scheme as “great encouragement for customers to support the nation’s pubs” while the Sustainable Restaurant Association’s chief executive Andrew Stephen, said: “Every family deserves a meal out and the Eat Out to Help Out initiative will help UK hospitality businesses be affordable to all in August.”

Confidence returning

Finally, HIM/MCA Insight's latest poll revealed that confidence continues to rise among business owners in the hospitality sector.

When asked simply how confident they were about the future, the number of hospitality operators who are 'not confident' in the future of their business reduced from 34.3% to 27.4% week on week, with those who are confident in the future of their business has increased from 66% to 73%.

Among those respondents, 5.2% described themselves as ‘very confident’ about the times ahead compared to 3.4% the previous week. 

Related topics: Legislation

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