The chancellor announced the extension of the reduction in value-added tax to the hospitality and tourism sectors – two of the sectors hardest hit by the epidemic.
Rishi Sunak said the temporary reduction of VAT rates from 20% to 5% will remain in effect until March 31, 2021, instead of January 13.
He said the measure “will help protect 2.4 million jobs during the winter season.”
But industry figures said they are “not yet out of the woods”.
Restaurants and bars in particular have been affected by the lockdown measures, and thousands of jobs have already been lost in the sector.
The temporary reduction of value-added tax first went into effect in July and is designed to help hotels, restaurants, cafes and bars shore up their finances.
However, some companies like KFC, Nando’s, and Pret, They decide to transfer the savings directly to customers by lowering prices at their outlets.
On Thursday, the chancellor said the extension of the value-added tax cut would help “support more than 150,000 companies” during the winter period.
Discount applies to food and non-alcoholic beverages, accommodation and entry to tourist attractions across the UK. According to the Treasury’s Winter Economic Plan.
What is Value Added Tax?
Value-added tax, or value-added tax, is the tax that you must pay when purchasing goods or services.
The standard UK value-added tax rate is 20%, with nearly half of the items families spend money on at that rate.
There is a discount rate of 5% that applies to things like baby car seats and household energy.
When you see a price for something in a store, then any VAT will already be added.
There are also many items that you do not have to pay any VAT for, such as most supermarket food, baby clothes, newspapers and magazines.
Some reasons to be positive
UK Hospitality Trade Union CEO Kate Nichols said the cut provided some good news for the sector after it was announced that bars and restaurants in England must close at 22:00 GMT.
“The announcement of more restrictions was a big blow that will definitely lead to a decline in trading,” she said.
“It was crucial that the Chancellor today provide support that has specifically targeted the hospitality sector, which has been affected the most.
“The chancellor has given us some reasons to be positive again but we are urging him to get involved in the trade on specific measures to keep people in business.
“While some of these measures announced today will give companies a future to look forward to and hope to be able to start rebuilding, we are not out of the woods yet.”
In an effort to boost consumer demand, Sunak introduced a “Eat Out to Help Out” scheme in August as restaurants and cafes gradually reopened over the summer.
Under the scheme, diners received a state-subsidized 50% discount on meals and soft drinks of up to £ 10 each Monday, Tuesday and Wednesday.
The Treasury Department said earlier in September More than 100 million meals have been claimed under the scheme, which has seen a rise in restaurant reservations.
However, many companies were forced to cut jobs due to the impact of the epidemic on trade in general.
On Tuesday, Whitbread, which owns Premiere Inn and Bevityer, He warned that 6,000 employees They may lose their jobs after guest numbers decline.
Last month , Pizza Express warned 1,100 people They may lose their jobs as part of the planned restructuring which will see the closure of 73 outlets.
In June, the restaurant group – that owns Frankie and Penny – It said it would cut as many as 3,000 jobs.
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