Truss’ rumoured VAT cut ‘big positive step’
According to The Sunday Telegraph, Truss is looking at a number of options including a large VAT cut.
UKHospitality boss Kate Nicholls outlined her support for the move on social media, highlighting the impact it would have on the sector.
She tweeted: “A VAT cut would not only help consumers now it would also underpin business viability going forward – protecting jobs and livelihoods in hospitality, boosting confidence and insulating against further price spokes, which fuel inflation. A big positive step.”
A VAT cut would not only help consumers now it would also underpin business viability going forward - protecting jobs and livelihoods in hospitality, boosting confidence and insulating against further price spikes which fuel inflation. A big positive step https://t.co/c52oRkmxUs
— Kate Nicholls OBE (@UKHospKate) August 29, 2022
This follows last month (July), there were reports Downing Street chief of staff Steve Barclay had suggested slashing VAT temporarily to 17.5%, with the aim to ease tax bills and the rate of inflation.
Burden to businesses
British Beer & Pub Association (BBPA) boss Emma McClarkin said the VAT cut was something the trade body had championed for a long time.
She added: “As one of the most highly taxed and regulated sectors in the UK, more needs to be done to create a fair and sustainable tax regime for our pubs and brewers and incentivise investment.
“The VAT increase to 20% in April added further burden to businesses that were already struggling to make ends meet with only one in three hospitality businesses making a profit and almost half operating reduced hours.
“A reduction would be extremely welcome and we hope the Government will seriously consider introducing it sooner rather than later.”
Furthermore, a survey from The Morning Advertiser revealed more than 70% of operators did not anticipate surviving the winter without Government intervention to solve the ongoing energy crisis.
Government response
In response to the continuing price hikes from energy companies, the Government said it would ‘carry on supporting the industry’.
A Government spokesperson said: “No national Government can control global factors pushing up the price of energy and other business costs but we will continue to support the hospitality sector in navigating the months ahead.
“That includes providing 50% business rates relief for businesses across the UK, freezing alcohol duty rates on beer, wine, cider and spirits and reducing employer national insurance.
“This is in addition to the billions in grants and loans offered throughout the pandemic.”
