Pubs face setback in VAT cut hopes as Treasury minister cautions against tax reduction
Pubs seeking a reduction in VAT were met with discouraging news as Treasury Minister James Murray stated that a cut would incur significant costs. This statement comes despite support for lowering hospitality VAT from 20% to 10% from figures such as Andy Burnham, who championed the idea before his ascent to Prime Minister, reports BritPanorama.
Murray emphasized the necessity for any VAT reduction to be “fully funded” and to provide taxpayers with value. He remarked, “We want to support hospitality, but let’s be upfront about this. If you’re having a big cut in VAT, it costs a lot of money, and anything that we announce, we want to make sure it’s fully funded, and we explain exactly how we’re going to do that.”
He highlighted that while the Prime Minister recently announced a 20% reduction in business rates, the government had been clear on how that would be financed. Murray noted, “We need to keep looking at how we can support high streets and particularly pubs because they’re so important to everyone right across the country.”
Calls for a reduced VAT rate from Burnham were reiterated by prominent chefs like Tom Kerridge, who have advocated for support for the struggling hospitality sector. The government’s current focus has been on alleviating business rates, announcing an additional 20% cut for pubs starting in April 2027.
The Treasury is also conducting a review regarding the valuation of pubs and hotels for business rates following substantial increases identified during the 2026 revaluation. UKHospitality’s chief, Kate Nicholls, stated that cutting VAT represents the quickest solution to address the cost of living crisis while making family dining more affordable and managing inflation. She underscored the importance of such measures for stimulating consumer confidence and generating economic growth.
As discussions around VAT cuts continue, the challenges faced by pubs highlight the balancing act required between fiscal responsibility and supporting vital sectors of the economy.
