KFC and Wetherspoons are among the major businesses to pass on VAT cuts to customers from today.
It comes as VAT is slashed from 20 per cent to 5 per cent for businesses in the hospitality and tourism industries across the UK under measures first announced in chancellor Rishi Sunak’s mini-Budget last week.
Hotels and restaurants will benefit from a VAT cut from today, but will they pass savings onto customers?
The cuts will last for six months until January 12, 2021 with the idea being that businesses will pass on the tax savings to households in the form of lower prices.
Booze is excluded from the VAT cut, but it will apply to food and non-alcoholic drinks from restaurants, pubs, bars, cafés and other similar premises across the UK.
It will also apply to accommodation and on admission to attractions.
If the savings are passed on in full, it means cuts of 12.5 per cent on the end price people pay.
The Treasury expects typical savings of £160 a year, which it hopes will encourage people to start spending in a bid to boost the floundering economy, which yesterday posted growth of just 1.8 per cent.
But it warns that it won’t force businesses to pass savings on, saying it understands many have struggled without an income for months during lockdown.
It adds that almost four in five businesses (78 per cent) reported passing on savings when VAT was reduced in 2008.
Which businesses will pass on VAT cuts?
Here’s a round-up of some of the businesses that have announced VAT cuts:
Accor Hotels – Ibis, Mercure, Novotel, Sofitel – full savings passed onto future bookings and to food and drink
Ibis says it will pass on the savings in full to eligible food and drink prices and to hotel bookings from today.
But it won’t apply the changes to current bookings for future stays.
KFC – varying price cuts but not across the whole menu
KFC isn’t cutting all menu items by a blanket 12.5 per cent.
Instead, KFC will reduce the price of sharing buckets by £1 and slash the cost of “fan favourites” by 50p.
It’s also introducing a limited time deal on its Boneless Banquet, which will see the price cut by 50 per cent from £10 to £4.99 until July 19.
Marriott – full savings passed onto future and current bookings
Hotel chain Marriott says the full VAT cut will be passed on to future bookings, while those with forward bookings who have already paid will receive a credit for the VAT difference upon check-out or have that amount off-set against any spending during their stay.
Park Holidays – full savings passed onto future bookings
Park Holidays, which owns 31 campsites across the UK, says it too will pass on the full VAT savings to future bookings and to existing ones where holidaymakers have yet to pay.
Wetherspoons – varying cuts of up to 28 per cent
Wetherspoons is spreading the cuts across food items, coffee, soft drinks and ale with some items falling in price by up to 28 per cent.
Other items will, however, fall by a smaller 4 per cent or see no decrease at all.
It is, however, still deciding what to do for future bookings that have already been paid for.
Cuts to VAT come alongside the government’s new Eat Out to Help Out scheme, which is offering additional savings of up to £10 a head on meals out during August.
Harvester and Pizza Hut are among the firms to sign up for this separate scheme.
