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5% VAT rate drop – support still needed for wet-led pubs

By July 14, 2020 No Comments

On Wednesday 8th July we heard Chancellor Rishi Sunak announce new measures to help support the hospitality sector during their recovery from the Covid-19 pandemic. Although the news was welcomed by many, there was also disappointment  over the lack of support for wet-led venues.

Support for Hospitality

During the update, Sunak announced how the government is planning to help the hospitality and tourism industry with an ‘Eat Out to Help Out’ discount scheme and a temporary VAT cut on food, accommodation and attractions. This cut will start tomorrow (15th July) and will see the VAT rate drop from 20% to 5% for the next 6 months. A number of establishments have already signed up to the ‘Eat Out to Help Out’ Scheme which will run throughout August. You can register here.

Sunak said: “This is a £4bn catalyst for the hospitality and tourism sectors benefiting over 150,000 businesses and consumers everywhere,” and hoped the new measures would help protect £2.4m jobs in the UK.

Wet-led pubs are left feeling disappointed

Unfortunately, these measures won’t have much impact on those businesses who make the majority of their profits through alcohol sales, as alcohol isn’t included in the VAT cut. There is concern that small ‘wet-led’ pubs have been left behind and it’s disappointing to see that there is no direct support for independent breweries or producers. 

Pubs will be able to claim the cut on non-alcoholic beverages and mixers, but there will be practical implications of splitting these products during sales.

Neil Warren (Accounting Web) has looked at the mixed supply issues in his latest article.

We take a look at an example:

“Fred goes into Jim’s licensed café on 15 July for a takeaway snack that includes a cheese and tomato sandwich, a bottle of beer and a café latte. He asks Jim for a VAT receipt so that he can claim input tax as he is away from home on business. The sandwich is zero-rated as cold takeaway food; the café latte benefits from the temporary VAT cut to 5%; the beer is excluded as an alcoholic product, so still subject to 20% VAT. Jim will either need an efficient till system to deal with three VAT rates on a single order or be good at maths if he issues a hand-written VAT receipt.”

We would love to hear your experiences and share how you are dealing with the new measures. As always we’re here to help guide you through the challenges that you may face.

Campaign for Pubs

You can help promote, support and protect our pubs by joining the ‘Campaign for pubs’ here.

CAMRA are continuing to campaign for greater support for all pubs – you can follow the latest here and support their #saveourpubs campaign.


Supporting jobs

As part of the plan to support jobs, a Job Retention Bonus will be introduced to help firms keep furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.

A new £2 billion Kickstart Scheme will also be launched to create hundreds of thousands of new, fully subsidised jobs for young people across the country. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment, will be eligible. Funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week – and employers will be able to top this wage up.

A total of £1.6 billion will be invested in scaling up employment support schemes, training and apprenticeships to help people looking for a job. Young people, who are amongst the worst hit by the crisis, will benefit from this. This includes:

  • Businesses will be given £2,000 for each new apprentice they hire under the age of 25. This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan.
  • A £111 million investment to triple the scale of traineeships in 2020-21 ensuring more young people have access to high quality training.
  • £17 million of funding to triple the number of sector-based work academy placements in 2020-21
  • Nearly £900 million to double the number of work coaches to 27,000;
  • Over a quarter of a million more young people to benefit from an extra £32 million investment in the National Careers Service.

If you would like to discuss any of the details outlined, please call a member of the team on 01255 850 002 or email accounts@gwcox.co.uk

 

 

 

 

 

pubexperts

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