Key facts
- A temporary VAT cut on children's meals from 20% to 5% will be in effect from June 25 to September 1.
- The scheme is intended to support struggling hospitality venues and ease financial pressure on families.
- Industry leaders have criticized the measure as insufficient and a "token gesture."
- One restaurant has introduced a high-priced "children's" menu to maximize the VAT benefit.
- The hospitality sector is pushing for a permanent VAT reduction to 10%.
The UK government has introduced a temporary Value Added Tax (VAT) cut on children's meals, reducing the rate from 20% to 5% for the summer period between June 25 and September 1. This initiative, part of a "Great British summer savings scheme," aims to provide relief to struggling hospitality businesses and ease financial burdens on families.
However, the measure has been met with significant criticism from within the hospitality sector. Industry leaders have derided the scheme as inadequate and even laughable, arguing that it fails to address the substantial cost increases faced by pubs, bars, and restaurants. Chris Jowsey, CEO of Admiral Taverns, described the discount as "so small it's embarrassing" and noted that it would not benefit pubs that do not serve food. He suggested that businesses might find "enterprising interpretations" of the rules.
One venue, The Blue Stoops in Kensington, has already launched a £25 menu for "children" that includes dishes like wild Burgundy snails and anchovy butter toast, with a dessert named "The Tax Break Tart." This move highlights the potential for businesses to exploit the scheme, as there is no obligation to verify the age of the customer ordering a discounted children's meal. Clement Ogbonnaya, owner of the Prince of Peckham pub, echoed sentiments that the VAT cut is a "token gesture" and called for a permanent reduction in VAT rates for the sector.
Industry representatives are advocating for a broader, permanent cut in VAT for hospitality to 10%, a policy supported by a petition with over 200,000 signatures and figures like Andy Burnham. They contrast the current UK VAT rate with lower rates in other European countries such as France, Spain, Italy, and Germany. Hospitality investor Sarah Willingham expressed skepticism about the government's pro-growth claims, calling the investment climate a "shitshow."
Pub bosses are grappling with rising costs, including energy bills and increased national insurance contributions, alongside higher minimum wage requirements. Matt Francis, owner of the Planet of the Grapes wine bar chain, criticized the perception of business owners as wealthy and highlighted the ongoing impact of past government-imposed closures during the COVID-19 pandemic.
A government spokesperson defended the scheme, stating it would help families enjoy days out and boost businesses. They also pointed to other support measures, such as business rates reform, corporation tax caps, and efforts to reduce the cost of living, as evidence of the government's commitment to supporting the economy and businesses.