THE government has revealed the full list of businesses where VAT will be cut next week including cinemas and hotels.
It comes after Chancellor Rishi Sunak announced in this week’s mini-Budget that the VAT rate will be slashed from 20 per cent to 5 per cent.
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The government is cutting the rate for the hospitality and tourism industries in order to help them bounce back from the coronavirus crisis.
It’ll come into effect on Wednesday, July 15, and will remain in place until January 12, 2021.
VAT is a tax paid by businesses to HMRC on the items or services they sell.
It’s typically passed on to consumers in the price they pay for these goods and services.
Booze is excluded from the VAT cut, but it will apply to food and non-alcoholic drinks from restaurants, pubs, bars, cafés, including takeaway.
It will also apply to holiday accommodation and on admission to certain attractions such as cinemas – we’ve listed all the businesses above.
Retailers and service providers don’t have to pass on the VAT cut savings to customers, but it’s hoped they’ll do so.
If they do, it could cut £300 off a one-week family staycation.
It’s also expected to reduce the cost of takeaways by 12.5 per cent, and you could save £50 in six months.
Meanwhile, the Treasury said the VAT reduction is expected to save households around £160 a year on average.
We’ve explained what to do if you’ve already pre-booked a holiday following the VAT cut and whether you can get a partial refund or discount.
Mr Sunak also revealed this week that restaurant and pub meals will be slashed in half from Monday to Wednesday during August.
The chancellor says these combined measures will create a £4billion saving for the hospitality and tourism sectors that will benefit over 150,000 businesses, as well as helping to protect 2.4 million jobs.
These industries have struggled during lockdown with pubs, restaurants and cafes only allowed to reopen on July 4 in England.