Days out, takeaways and trips to the cinema should all become cheaper from today as a new tax cut comes into force across the hospitality sector.
Theatre tickets, amusement parks and even zoos will benefit from a VAT cut as part of a £4.1 billion plan to boost tourism and get the public spending again.
Chancellor Rishi Sunak said value added tax will drop from 20% to 5% for six months from Wednesday, with food and non-alcoholic drinks also included.
He said the move will "get the sectors moving and protect jobs" as the UK Government prepares to close the furlough scheme in October.
The cut will run until next year - January 12, 2021 - and will also include takeaways and meals out as well as hotel, B&B and campsite stays.
However, it will only apply where businesses decide to pass the discount on.
What's included in the VAT cut?
Small and local pubs, restaurants and attractions will be able to charge less tax, with value added tax dropping from 20% to 5% for six months.
The cut applies to food and non-alcoholic drinks as well as accommodation and admission to attractions across the UK, such as zoos and cinemas.
It will affect the following food purchases:
- Food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafés and pubs
- Hot takeaway food and hot takeaway non-alcoholic beverages
- Sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities.
Admissions to the following attractions will also be included in the VAT cut:
- Theatres
- Circuses
- Fairs
- Amusement parks
- Concerts
- Museums
- Zoos
- Cinemas
- Exhibitions
- Similar cultural events and facilities
How much money will I save?
"The rate change could mean a range of savings for consumers," Daniel Lyons, the head of tax policy at accountants Deloitte explains, but this will ultimately depend on whether the retailer chooses to pass the benefit on.
"For a pub meal costing £45 without alcohol, a couple could expect to save £5.62, while a £54.50 one-night stay at a hotel in a family room would see a saving of £6.81," Lyons explained.
"A family ticket to a theme park or zoo costing £144 could see a saving of nearly £18."
But these savings will only apply if merchants agree to pass the cut on.
Some hotels, for example, are now operating at a reduced capacity to ensure social distancing, which means they cannot afford to pass the cut on. There is also the cost of the extra cleaning measures and PPE to consider.
