Hospitality sector pushes for VAT cut after summer scheme
Following the end of a ten-week VAT reduction on children's meals, hospitality leaders are campaigning for a permanent, sector-wide cut from 20% to 10%
Hospitality and leisure businesses in the UK saw VAT on children's meals cut from 20% to 5% for ten weeks this summer under the government's Great British Summer Savings scheme. Now the scheme has ended, sector bosses are using it to argue for a permanent, broader VAT reduction.
Chef Tom Kerridge's #VATsTheProblem campaign, launched in June, is demanding a permanent VAT cut for hospitality from 20% to 10%. The campaign has gathered over 350,000 signatures and backing from major trade bodies like UKHospitality and the British Beer & Pub Association.
Summer scheme fuels calls for permanent cut
The government's summer scheme was announced on 21 May. Jacyn Heavens, CEO at Epos Now, described it as a "useful but small release" from industry pressures. Epos Now data indicated some businesses, such as holiday park operator Haven, passed the savings directly to customers, returning an estimated £4 million to holidaymakers.
For many in the sector, however, the limited, temporary cut was insufficient. Kerridge told This is Money the scheme showed the government 'has now recognised that VAT is the lever to pull to drive footfall, support families and back hospitality businesses'. He argued the 'next logical step is a lower rate for the entire hospitality sector'.
The push comes against a difficult backdrop. Data from CGA by NIQ shows Britain lost 1,839 licensed venues between March and June 2026 alone. A UK Hospitality survey found 23% of UK pubs and restaurants are now operating at a loss. The UK's current 20% VAT rate is the second-highest in Europe, with countries like France, Spain, and Italy charging 10%.
Debate over who a VAT cut would help
Not all analysts believe a blanket VAT cut is the right solution. Tax Policy Associates points out that 45% of UK hospitality businesses have a taxable turnover below the £90,000 VAT threshold and therefore do not pay VAT currently. These microbusinesses would see no direct benefit from a rate cut but would still face other rising costs.
The group estimates that large corporations like McDonald's could receive VAT windfalls exceeding £400 million a year from an across-the-board cut. Meanwhile, broader cost pressures like employer National Insurance increases, rising energy and food costs, and business rates have added roughly £3.5 billion annually to the sector's bills.
Some experts suggest alternative measures would more effectively target struggling small businesses. Proposals include replacing business rates with a land value tax and reversing the employer National Insurance increase, rather than implementing a blanket VAT reduction.
How to support the campaign
For those backing the call for a lower VAT rate, the #VATsTheProblem campaign offers several ways to get involved. Supporters can sign an online petition on the campaign's website. Businesses can download a toolkit containing campaign assets like posters. The campaign also encourages spreading awareness through personal and professional networks.
The end of the summer scheme has solidified VAT as a central political issue for hospitality, with the debate now focused on whether a sector-wide tax cut is the most effective tool for supporting independent venues.
