Your favourite UK restaurant could soon disappear — one change might save it

The UK’s hospitality industry is at breaking point.

Roughly 21 independent businesses have closed per week since March 2020, and many more restaurants, pubs, cafes, clubs, and hotels are at risk of going under.

In the last few months alone, London has lost dozens of beloved spots, including Tandoor Chop House, Da Maria, Club Mexicana, Caravel, Sophie’s Steakhouse, and Club Gascon, plus most of the Patty & Bun sites. 

Italian restaurant chain Spaghetti House also recently shuttered all of its sites across the capital, after 70 years of operation. 

Business owners and industry workers have well and truly had enough, and they’re now calling on the government to step in and make some changes – starting with reducing the current tax burden. 

What’s the problem with hospitality VAT rates?

In the UK, 20% VAT (Value Added Tax) is added onto most hospitality services, such as restaurant meals, drinks in bars and clubs, coffees in cafes, and hotel stays.

This means that if your dinner out was £100, you’d be charged an extra 20% on top, taking your total to £120.

The 20% rate for restaurants is considered controversial because it’s much higher than the standard applied in other European countries – in Germany, the rate is just 7% on dining, while in France ,Italy, and Spain it’s 10%.

The UK actually has the second-highest VAT rate in Europe for hospitality, with only Denmark being higher at 25%.

What happens to the VAT?

The VAT goes to HMRC, who pass it into the government’s general funds to help pay for public services and government spending. 

It’s not earmarked for anything specific, but examples of its use could be the NHS, schools and education, police and courts, or welfare and pensions.

VAT’s the problem

A petition has been launched by members of the UK hospitality industry, called #VATsTheProblem.

The movement is being spearheaded by chef Tom Kerridge, who is urging the country to come together in calling for a ‘fairer’ 10% VAT rate for hospitality.

‘Lowering the rate of VAT for hospitality is the single most important thing the Government could do to support our local pubs, restaurants, cafes, hotels, and many more,’ the petition explains. 

‘It would be a huge boost to the great British public, too.’

Tom is keen for the petition to reach one million signatures.

The campaign is supported by UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping, and CODE Hospitality.

What would a lower VAT rate mean for Brits?

The biggest benefit would be that it would help take the immediate pressure off independent restaurants, cafes, bars, nightclubs, and other hospitality businesses, so they don’t disappear.

Not only would this mean we’d be able to keep on enjoying our favourite places and connecting with the local community, but saving these businesses also helps to keep people in jobs. A whopping 100,000 jobs have gone in the last two years alone, and many workers have also had their hours cut.

Lowering the VAT rate could also allow businesses to keep prices down, meaning more affordable food and drink, and possibly even cheaper hotel stays.

And it will allow for greater choice on the high street, providing different and diverse experiences for people to enjoy, instead of cookie-cutter towns and cities filled with the same chain coffee shops and fast food joints everywhere you go.

At the time of writing, more than 177,600 people have signed the VAT’s The Problem petition, and it’s been gaining a lot of support online from foodies.

Top Jaw’s Jesse Burgess has shared a heartfelt plea online, encouraging people to sign the petition. He said: ‘If we’re not careful, we’re going to lose the majority of our independent restaurants, cafes, and bars. Every day, places are just closing down, and there’s one thing that could stop it. 

‘We are the only European nation that has a 20% VAT rate on hospitality, and it is suffocating the industry, like a full chokehold.’

He continued: ‘We have one of the best food and drink scenes in the world. We often set trends that the rest of the world follows, so f***ing protect it.

‘The only thing that could work overnight is for Rachel Reeves to adjust VAT on hospitality businesses. 

‘There’s a petition online at the moment to make sure this is talked about in government. Go sign it.’

Andy Burnham is also supporting the cause, and the mayor of Greater Manchester has said he would back a reduced 10% VAT rate for the hospitality sector if he becomes prime minister.

To sign the petition, visit vatstheproblem.co.uk/

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